U.S. ADP Report Indicates Private-Sector Job Growth Resumed

In their latest National Employment Report, the payroll processor, Automatic Data Processing (ADP), indicated that the level of private nonfarm payrolls rose 43,000 m/m during October. The September report was revised to show a lesser 2,000 worker decline, revised up from -39,000 reported initially. The latest gain slightly exceeded Consensus expectations for a 20,000 increase.

The U.S. Bureau of Labor Statistics will report October payroll employment on Friday. Economists expect a 60,000 worker decline in jobs overall due to the layoff of temporary Census workers. For comparison, the September decline of 2,000 in ADP's measure of private nonfarm payrolls was accompanied by a 64,000 rise in the BLS measure of private sector jobs. According to ADP and Macro-Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90. ADP compiled the estimate from its database of individual companies' payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator.

A relatively steady 34,000 decline (-2.7% y/y) in goods producing employment held back accounted for the October jobs decline. Payrolls have been falling since early-2006 but the rate of decline has slowed substantially. At their worst, goods producing employment fell 334,000 during February of last year. In the manufacturing sector alone payrolls slipped another 12,000 (-0.5% y/y). Goods producing small payrolls fell 16,000 (-4.1% y/y) while medium-sized payrolls fell 7,000 (-1.4% y/y). Large-sized payrolls continued lower by 11,000 (-2.9% y/y). Construction employment fell 23,000. The greatest monthly drop of 120,000 was logged during March of 2009. Financial activities jobs slipped just 2,000.

ADP reported that private service-producing industry employment rose for the ninth consecutive month and the 77,000 October increase was near the largest of the period. Small-sized payrolls grew 37,000 m/m (0.6% y/y) while medium-sized payrolls rose 31,000 (0.6% y/y). Large service-producing payrolls inched up 9,000 (0.1% y/y).

The ADP National Employment Report data is maintained in Haver's USECON database; historical figures date back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector. The ADP methodology is explained here.

ADP National Employment Report	Oct.	Sept.	Aug.	Y/Y	2009	2008	2007
Total Nonfarm Private Payroll Employment(m/m Chg., 000s)	43	-2	37	-0.0%	-4.9%	-0.7%	1.1%
Small Payroll (1-49)	21	1	16	-0.1	-4.1	-0.1	1.8
Medium Payroll (50-499)	24	2	15	0.2	-5.7	-0.9	1.0
Large Payroll (>500)	-2	-5	6	-0.5	-5.6	-1.8	-0.2
Goods Producing	-34	-41	-18	-2.7	-12.3	-3.7	-1.1
Manufacturing	-12	-15	5	-0.5	-11.1	-3.0	-1.7
Service Producing	77	39	55	0.5	-3.3	0.0	1.7