Economic Research and Data

Economic Trends

Filling you in on the current state of the economy

03.09.07

Economic Activity and Labor

The ADP National Employment Report

Automatic Data Processing (ADP), a company that provides payroll services to firms nationwide, reports monthly estimates of employment a few days before the Bureau of Labor Statistics (BLS) publishes its Employment Situation. ADP’s estimates, published in ADP National Employment Report, are based on its clients’ payroll data.

According to the estimates released Wednesday, March 7, private nonfarm employment increased nationwide a modest 57,000 in February (on a seasonally adjusted basis), following a strong increase of 121,000 in January. The latest estimate represents the smallest increase in ADP’s total private nonfarm employment series since July 2003.

The service sector added 100,000 jobs, an increase which did not quite reach the past three-month average of 171,000. The goods-producing sector, however, lost 43,000 workers during February, mostly because of a 29,000 decrease in manufacturing jobs. This was the sharpest decline since September 2006.

Small and midsize firms remained the main providers of employment growth in February. Small firms (those with fewer than 50 workers) added 53,000 more employees than midsize establishments (those employing 50 to 499), which added only 33,000. The employment growth at small and midsize employers was partially offset by a decline in payrolls at large establishments. According to ADP’s estimates, large establishments lost 29,000 workers in February, marking the largest monthly decline in firms of this size since June 2003.

 

ADP National Employment Report sometimes revises its estimates. These revisions can significantly change the initial picture. For instance, in December 2006, ADP first reported a 40,000 decline in nonfarm employment for the previous month, but later revised the estimate up, reporting a strong 118,000 increase in payrolls. Because of potentially significant revisions, it is better to proceed with caution when interpreting initial monthly employment numbers. (This goes for the BLS as well. See a similar picture of revisions in BLS data in last month's Economic Trends.)

 




Economic Trends is published by the Research Department of the Federal Reserve Bank of Cleveland.

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