Wednesday, March 3, 2010

Services Employment Stabilizing

The headline figure that's reported regarding ADP news (per Marketwatch):

According to today's ADP National Employment Report(R), private sector employment decreased by 20,000 in February. The ADP National Employment Report, created by Automatic Data Processing, Inc. (ADP(R)), in partnership with Macroeconomic Advisers, LLC, is derived from actual payroll data and measures the change in total nonfarm private employment each month.
And the corresponding chart.

But hidden in the release is this...
Automatic Data Processing, Inc, in conjunction with Macroeconomic Advisers, LLC, has published the scheduled annual revisions to the estimates of employment shown in the ADP National Employment Report. This month's ADP Report incorporates revised historical estimates based on the 2010 benchmark revisions to establishment employment published by the Bureau of Labor Statistics on February 6, 2010.
And the revision (vs. last month's release) was as follows:

So, ADP reports almost 1.4 million less people employed than last month, BUT it is important to note that this revision was done only to match that of the BLS (thus, don't expect a similar revision in Friday's national release). This may in part explain why the ADP report has been reporting stronger employment in the services sector, while the ISM services report shows continued contraction more aligned with the BLS. This month is no exception. ISM reports (hat tip Calculated Risk):
Employment activity in the non-manufacturing sector contracted in February for the 26th consecutive month. ISM's Non-Manufacturing Employment Index for February registered 48.6 percent. This reflects an increase of 4 percentage points when compared to the seasonally adjusted 44.6 percent registered in January.

We'll see Friday how this plays out in the BLS figure, but it appears that a slight decline in the services sector is likely, though we are getting close to what appears to be the bottom.

Source: ADP / ISM

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