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Analysis of November's ReportPrint the PDF Version of the ADP Report Wednesday, December 5, 2007, 8:15 am EST Nonfarm private employment grew 189,000 from October to November of 2007 on a seasonally adjusted basis, according to the ADP National Employment Report®. The estimated change in employment from September to October was revised up 13,000 to 119,000. November's increase of 189,000 marked a further acceleration of nonfarm private employment. The three-month average change in employment for September through November was 123,000, up from 43,000 during the three-month period from July through September. The strength in employment during November was fairly broad-based. Even in manufacturing, construction, and financial services, sectors where employment has been under downward pressure, there are signs of accelerating employment. Employment in the service-providing sector of the economy grew a very strong 197,000, while employment in the goods-producing sector declined a modest 8,000, the twelfth consecutive monthly decline. However, this is the smallest decline in the goods-producing sector during the last twelve months, during which the average monthly decline was 30,000. In addition, employment in the goods-producing sector has accelerated (has become less negative) in each of the last three months. Manufacturing employment fell for the fifteenth consecutive month, but November's decline of 5,000 was the smallest monthly decline registered during that span. In addition, employment in the manufacturing sector has also accelerated (has become less negative) in each of the last three months. Small- and medium-size businesses more than accounted for the increase in total employment in November, with employment among these businesses advancing by 159,000. In addition, there was a sizable increase of 30,000 in employment among businesses with 500 or more workers, reversing five consecutive monthly declines. This increase in employment among large businesses was concentrated in the service-providing sector which advanced 32,000 during the month, and was slightly offset by an employment decline of 2,000 among these businesses in the goods-producing sector. Two sectors of the economy hit hardest by recent problems in mortgage markets have been residential construction and financial activities related to home sales and mortgage lending. Today's data suggest that in these two crucial sectors employment may be stabilizing. In November, construction employment fell for the twelfth consecutive month, but November's decline of 6,000 was the smallest since January (see chart 5). Furthermore, construction employment has accelerated (has become less negative) in each of the last three months. Employment in financial activities, which declined by 16,000 from July through October, reversed course and grew 10,000 in November (see chart 5). Note that there was a five-week interval between the October and November survey dates for the Bureau of Labor Statistics Employment Situation Report. Since the estimates of employment in the ADP National Employment Report are explicitly adjusted for this calendar effect, the strength of today's numbers is not influenced by the five-week interval. For information on the construction and use of the ADP Report, please visit the methodology section of the ADP National Employment Report website at http://ADPemploymentreport.com/methodology.aspx .
The matched sample used to develop the ADP National Employment Report was derived from ADP data which, during the first six months of 2007, averaged approximately 383,000 payrolls representing nearly 23 million U.S. employees. This approximately represents the size of the matched sample used this month.
About the ADP National Employment Report ® The ADP National Employment Report, sponsored by ADP®, was developed and is maintained by Macroeconomic Advisers, LLC. It is a measure of employment derived from an anonymous subset of roughly 500,000 U.S. business clients. During the first six months of 2007, this subset represented approximately 383,000 U.S. business clients and nearly 23 million U.S. employees working in all private industrial sectors. The data is collected for pay periods that can be interpolated to include the week of the 12th of each month, and processed with statistical methodologies similar to those used by the U.S. Bureau of Labor Statistics to compute employment from its monthly survey of establishments. Due to this processing, this subset is modified to make it indicative of national employment levels; therefore, the resulting employment changes computed for the ADP National Employment Report are not representative of changes in ADP's total base of U.S. business clients. Empirical analysis performed by Macroeconomic Advisers suggests that the ADP National Employment Report can be used to develop a forecast of "true" employment that is superior to those resulting from consensus estimates, survey data, or other models of employment that do not incorporate the results of the ADP Report. For a description of the underlying data and the statistical properties of the series, please see "ADP National Employment Report: Development Methodology" at http://ADPemploymentreport.com/methodology.aspx.
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