ADP Report Says Small Employers Creating Jobs

Aug 4, 2010
This article is part of a series called News & Trends.

Eyes are on Friday’s U.S. employment report following today’s surprise from payroll processor ADP that showed more private sector jobs were created in July than economists expected.

Though far from the 150,000 monthly new jobs considered the minimum necessary to reduce unemployment and keep pace with workforce growth, ADP’s 42,000 job increase was almost 70 percent higher than the anticipated 25,000. It was the sixth consecutive increase in the ADP private payroll numbers.

All the growth came from small and medium-sized businesses in the service sector. The ADP National Employment Report said large firms (500 or more employees) added no jobs. Growth among these businesses has been essentially flat since April.

The report, derived from ADP’s payroll information and prepared by Macroeconomic Advisers, tallies only private sector jobs. The broader U.S. Bureau of Labor Statistics numbers includes government jobs. It’s expected to show a net loss of around 60,000 jobs in July, mostly due to the layoff of temporary U.S. Census workers.

A Dow Jones Newswires survey of economists shows that on average they expect an overall loss of 87,000 jobs. Private sector job growth is projected to be about 100,000. The unemployment rate is expected to edge up slightly to 9.6 percent.

What this means is that there is some improvement in the private sector, even if it is relatively anemic. A year ago, ADP estimated job losses at 369,000 while the BLS put the number at 344,000 lost jobs.

Global outplacement consultancy Challenger, Gray & Christmas also saw the sliver lining in the otherwise dark cloud. The firm’s monthly job layoff numbers were up 6 percent in July to 41,676 workers. Although it was the third monthly increase in a row, firm CEO John Challenger said, “The increases are so slight and the monthly totals so low when compared to recent years, that the trend in no way suggests a reversal of the significant slowdown in job-cut activity witnessed over the past year.”

Total layoffs announced in the second quarter were 116,494. That’s the lowest number of announced cuts since the same period 10 years ago.

Another report released today added its own encouragement. The Institute for Supply Management said the U.S. non-manufacturing sector grew faster than expected in July.  The Institute’s purchasing managers’ index improved to 54.3 in July, better than the 53.1 that had been forecast.

One more positive sign came Monday from The Conference Board. The business and economic research group said its tally of online job ads rose by 139,000. That’s the biggest increase in job postings since April.

This article is part of a series called News & Trends.
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