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Economy in Brief

ADP Report: Private Sector Job Loss Disappoints Expectations
by Tom Moeller March 31, 2010

The rate of job loss has been slowing for a year, but a turn to positive territory isn't yet at hand. The latest report from the payroll processor ADP, in their National Employment Report, indicated that February private nonfarm payroll levels declined 23,000 following a revised 24,000 decline during January. The decline compared to the Consensus expectation for a gain of 40,000 jobs. The latest reading was the twenty-sixth consecutive monthly decline but it was the smallest of the period. Earlier data were revised. /p>

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 U.S. Bureau of Labor Statistics will report February payroll employment this Friday. For comparison, the January decline of 24,000 in ADP's measure of private nonfarm payrolls was accompanied by a similar loss of 18,000 jobs 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.

ADP reported that private service-producing industry employment rose for the second consecutive month with a gain of 28,000 (-1.3% y/y). Small-sized payrolls grew 15,000 (-0.9% y/y) while medium-sized payrolls grew 10,000 (-1.4% y/y). These increases were accompanied by a 3,000 increase (-1.9% y/y) in large service producing payrolls.

In the goods producing sector employment fell another 51,000 during February (-8.7% y/y) but the three-month annual rate of change eased again to -3.9% versus -18.1% one year ago. Small-sized payrolls fell 27,000 (-9.4% y/y) while medium-sized payrolls fell 14,000 (-7.9% y/y). Large payrolls fell 10,000 (-9.2% y/y). In the manufacturing sector alone, payrolls fell 9,000 (-6.5% y/y). The three-month change moderated to -1.1% from -17.5% last March.

The ADP National Employment Report data is maintained in Haver's USECONdatabase; 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 full ADP National Employment Report can be found here and the ADP methodology is explained here.

ADP National Employment Report February January December Y/Y 2009 2008 2007
Total Nonfarm Private Payroll Employment (m/m Chg., 000s) -23 -24 -82 -2.6% -4.9% -0.7% 1.1%
   Small Payroll (1-49) -12 -19 -35 -2.1 -4.1 -0.1 1.8
   Medium Payroll (50-499) -4 6 -20 -2.7 -5.7 -0.9 1.0
   Large Payroll (>500) -7 -11 -27 -3.5 -5.6 -1.8 -0.2
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