ADP, NFP Numbers

by: Barry Ritholtz

Construction and Financial Jobs:

Source: ADP, Macroeconomic advisors

Friday we learn what BLS data shows for the Non-Farm Payroll data for February. Consensus is for a meek 25,000 new jobs created. However, given the present concerns about a recession and the ongoing rate cut beggary, this data point could have outsized consequences.

The ADP Employment Change showed a decline of 23,000; expectations were for +18,000:

Nonfarm private employment declined 23,000 from January to February 2008 on a seasonally adjusted basis, according to the ADP National Employment Report. The estimated change in employment from December 2007 to January 2008 was revised down 11,000 to 119,000. February’s decline of 23,000 signals a deceleration of employment growth across businesses of all sizes. . .
Most of the decline in employment during February was accounted for by job losses at large companies, but there was a notable deceleration of employment growth at businesses of all sizes. Employment among small-size businesses, defined as those with fewer than 50 workers, advanced just 15,000 during the month, while employment among medium-size businesses with between 50 and 499 workers dropped 4,000. This was the first outright decline at medium-size businesses since June of 2003, when job growth was still recovering from the last recession. Employment at large businesses with more than 500 workers declined 34,000.

Note that ADP is only private sector employment, and does not reflect government hiring.

The most recent NFP data has been particularly volatile. We had a huge swing between January and February 2007, largely caused by the Birth Death adjustments. This year, expect more of the same. In January 2008, we saw a -378k B/D jobs adjustment; A year ago February (Feb 2007) it was +118k.

Expect the unexpected...

A Closer Look at Unemployment
Thursday, September 06, 2007 | 07:19 AM

ADP National Employment Report
Wednesday, March 5, 2008, 8:15 A.M. ET

ADP Report (PDF)
CES Net Birth/Death Model
BLS February 1, 2008

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