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Economy in Brief

ADP Report: July Payrolls Rose With Service Sector Hiring
by Tom Moeller July 30, 2008

The ADP National Employment Report, from the payroll processor, indicated that July private nonfarm payrolls rose 9,000 after a revised 77,000 worker decline during June. Expectations had been for a July decline of 60,000.

 The U.S. Bureau of Labor Statistics will report on July nonfarm payrolls this Friday. Last month, the 77,000 worker decline in ADP's measure of private nonfarm payrolls was accompanied by a 91,000 worker decline in the BLS measure of private sector payrolls.

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.

Higher employment in the service producing industry accounted for the gain in ADP's measure for July with a 74,000 (1.1% y/y) increase. Small payrolls rose 56,000 (1.6% y/y) while medium sized payrolls increased 20,000 (1.2% y/y). Large service producing payrolls reported a 2,000 (-0.4% y/y) decline which was the seventh drop in the last eight months.

Goods producing payrolls fell by 65,000 (-2.5% y/y) led by a large decline of 29,000 (-2.7% y/y) in medium sized payrolls and a 30,000 (-4.3% y/y) worker decline in large payrolls.

The ADP sub-index for large payrolls overall fell 32,000 (-1.3% y/y) following a 51,000 worker drop during June.

A 9,000 (+0.4% y/y) worker decline in medium sized payrolls followed a 33,000 shortfall during June.

Small sized payrolls in July rose 50,000 (1.2% y/y) and that followed a meager 7,000 June uptick.

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.

The ADP National Employment Report data is maintained in Haver's

USECONdatabase; historical data go back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector, which rose an average 11,083 during the last twelve months.

The full ADP National Employment Report can be found here, and the ADP methodology is explained here.

Interpreting the Great Moderation: Changes in the Volatility of Economic Activity at the Macro and Micro Levels from the Federal Reserve Bank of New York is available here.

[email protected] July June Y/Y 2007 2006 2005
Nonfarm Private Payroll Employment (m/m Chg.) 9,000 -77,000 0.5% 1.1% 1.7% 1.8%
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