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Economy in Brief

ADP Reports Reduced Forward Momentum In The Labor Market
by Tom Moeller  June 1, 2011

In its latest National Employment Report, the payroll processor Automatic Data Processing (ADP) and economic consultants Macroeconomic Advisers, indicated that the May level of private nonfarm payrolls rose just 38,000 after a 177,000 April increase, revised from 179,000. The latest gain fell well short of Action Economics' expectation for a 180,000 increase. It was the smallest increase since September of last year and lowered three-month growth to 1.6% (AR) versus the February peak of 2.4%.

The U.S. Bureau of Labor Statistics will report May payroll employment on Friday. Economists expect a 190,000 worker increase in jobs. For comparison, the April increase of 177,000 in ADP's measure of private nonfarm payrolls was accompanied by a 268,000 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.

Slower job growth was logged in all of the ADP categories. A 48,000 gain in service-producing payrolls was roughly one-third the recent increases while goods-producing payrolls fell for the first month since October. Factory sector jobs fell 9,000. Overall, small-sized payrolls grew 27,000 m/m (1.5% y/y) while medium-sized payrolls rose 30,000 (1.7% y/y). Large payrolls fell 19,000 (+0.2% y/y). Construction employment fell 8,000 and the number of financial activities jobs slipped 6,000.

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. The expectations figure is available in Haver's AS1REPNA database.

ADP National Employment Report May Apr Mar Y/Y 2010 2009 2008
Nonfarm Private Payroll Employment (m/m Chg., 000s) 38 177 203 1.3% -1.1% -4.8% -0.6%
  Small Payroll (1-49) 27 84 97 1.5 -0.8 -3.9 0.0
  Medium Payroll (50-499) 30 83 85 1.7 -1.0 -5.6 -0.9
  Large Payroll (>500) -19 10 21 0.1 -2.0 -5.6 -1.9
Goods Producing -10 36 38 0.5 -5.1 -12.3 -3.6
  Manufacturing -9 20 36 1.1 -3.3 -11.3 -3.2
Service Producing 48 141 165 1.5 -0.2 -3.1 0.1
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