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Wednesday, March 4, 2009

A Better ADP Summary from Havers

ADP Report: U.S. Payroll Employment Off 697,000

· The payroll processor ADP indicated in its latest National Employment Report that private nonfarm payrolls fell 697,000 last month. That followed a 614,000 decline during January which was revised from the initial estimate of a 522,000 decline. The reading was the fourteenth consecutive monthly decline and during the last three months payrolls have fallen at a 6.7% annual rate. Last month medium sized payrolls fell 314,000 followed by a 262,000 worker decline in small sized payrolls. Large payrolls fell by 121,000.

·The U.S. Bureau of Labor Statistics will report payroll employment this Friday. For comparison, January's 614,000 worker decline (-2.9% y/y) in ADP's measure of private nonfarm payrolls was accompanied by a 604,000 worker decline (-3.2% y/y) 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 weakness in goods producing payrolls resulted in job declines last month of 338,000 (-8.9% y/y). Medium sized payrolls fell 155,000 (-9.2% y/y) followed by a 116,000 (-8.0% y/y) shortfall in small sized payrolls. Large payrolls fell 67,000 (-9.8% y/y). In the manufacturing sector alone, payrolls fell 219,000 (-9.0% y/y). It has fallen in almost every month since 2001.

· Employment in the service producing industry fell hard as well and about as it did during the prior two months. The 359,000 (-2.1% y/y) decline was the eleventh consecutive monthly decline. Medium sized payrolls fell 159,000 (-2.4% y/y) and small sized payrolls fell 146,000 (-1.7% y/y). Large service producing payrolls dropped by 54,000 (-2.6% y/y).

· 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 USECON

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