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Economy in Brief

U.S. ADP Private Payroll Increase Moderates
by Tom Moeller  September 6, 2018

The ADP/Moody's National Employment Report indicated that private nonfarm payrolls increased 163,000 during August (1.8% y/y) following a 217,000 July gain, revised from 219,000. The increase disappointed expectations for a 190,000 rise expected in the Action Economics Forecast Survey. It was the smallest increase since October. It pulled the three-month moving average change to 186,000, down from 227,000 averaged in Q1. During the last ten years, there has been a 96% correlation between the change in the ADP figure and the change in nonfarm private-sector payrolls as measured by the Bureau of Labor Statistics.

The Automatic Data Processing Research Institute survey is based on ADP's business payroll transaction system covering 411,000 companies and nearly 24 million employees. The data are processed by Moody's Analytics Inc., then calibrated and aligned with the BLS establishment survey data. The ADP data cover private sector employment only.

Small-sized payrolls expanded 21,000 (1.0% y/y) after a 59,000 July gain. Three-month average growth has decelerated from the recent high of 85,000 in Q1'17. Large-sized payrolls improved 31,000 (2.5% y/y) following a 42,000 rise. Three-month average growth deteriorated to 45,000, roughly half the growth as of October. Medium-sized payrolls increased 111,000 (2.4% y/y). Three-month average growth picked up to 103,000, the strongest in roughly four years.

Private service-producing payrolls increased 139,000 (1.7% y/y), the weakest gain in four months. Education & health services employment rose a lessened 31,000 (2.0% y/y) while professional & business services jobs rose a weakened 38,000 (2.6% y/y). Employment in the leisure & hospitality sector increased a moderated 25,000 (2.1% y/y). The number of trade, transportation and utilities jobs firmed a steady 21,000 (1.1% y/y). Financial activities jobs increased a lessened 7,000 (1.4% y/y). Employment in the information sector rose an improved 8,000 (-0.1% y/y).

Employment in the goods-producing sector rose 24,000 (2.4% y/y), the smallest increase since October. Job growth in the factory sector remained strong, posting a 19,000 rise (1.8% y/y). Growth in construction employment weakened to 5,000 (3.0% y/y) from a 35,000 December high. Jobs in the natural resource & mining sector fell 1,000 (+6.2% y/y).

The ADP National Employment Report data can be found in Haver's USECON database; historical figures date back to April 2001 for the total and industry breakdown, and back to January 2005 for the business size breakout. The expectation figure is available in Haver's AS1REPNA database

ADP/Moody's National Employment Report Aug Jul Jun Aug Y/Y 2017 2016 2015
Nonfarm Private Payroll Employment (m/m chg, 000s) 163 217 178 1.8% 1.8% 1.9% 2.3%
 Small Payroll (1-49) 21 59 33 1.0 1.3 1.9 1.9
 Medium Payroll (50-499) 111 116 82 2.4 1.9 1.5 2.3
 Large Payroll (>500) 31 42 63 2.5 2.3 2.7 3.0
Goods-Producing 24 41 27 2.4 1.5 0.8 2.0
  Construction 5 16 10 3.0 3.1 4.3 5.3
  Manufacturing 19 22 13 1.8 0.7 0.2 1.2
Service-Producing 139 177 151 1.7 1.8 2.2 2.3
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