Analysis of September's Report

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Wednesday, October 3, 2007, 8:15 am EDT

Nonfarm private employment grew 58,000 from August to September of 2007 on a seasonally adjusted basis, according to the ADP National Employment Report^®. The estimated change in employment from July to August was revised down by 11,000 to 27,000.

This month's ADP National Employment Report was the third consecutive weak reading and confirms the recent deceleration of employment.

In September, employment in the service-providing sector of the economy grew a moderate 97,000, while employment in the goods-producing sector declined 39,000. This marks the tenth consecutive monthly decline in the goods-producing sector. Employment in the manufacturing sector declined 22,000.

Small- and medium-size businesses more than accounted for the increase in total employment in September, with employment among these businesses advancing by 84,000. In contrast, employment among large businesses fell by 26,000 in September, the fourth consecutive monthly decline.

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. In September, employment in the construction sector fell 20,000, the twelfth decline in thirteen months, bringing the cumulative decline since August of 2006 to 157,000. In addition, employment in the financial activities sector dropped 7,000 in September, the second consecutive monthly decline after nearly six years of uninterrupted growth (see chart 5).

The gains in employment at small- and medium-size businesses were concentrated in the service-providing sector of the economy, which showed a gain of 109,000. However, employment among these same-size businesses in the good-producing sector fell 25,000.

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 .

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.

For a full schedule of future releases, please visit: www.ADPemploymentreport.com

Media contacts: ADP Public Relations: 973-974-7612
Macroeconomic Advisers: 314-721-4747

Technical information: 314-721-4747
www.ADPemploymentreport.com

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