ADP Report August 2012: 201,000 Private Sector Jobs Added

ADP Numbers for August 2012:  

Private sector jobs increase by a strong 201,000 jobs.  Will this number be in the same ballpark of the number of jobs to be reported by the BLS tomorrow, Friday, September 7th?

The report also shows upwards revisions for July numbers in total private jobs numbers (revised up by 11,000 jobs), goods producing jobs (revised up by 2,000 jobs), and service producing jobs (revised up by 13,000).

ADP numbers also show 790,000 new private sector jobs since March 2012, and the largest monthly increase in private sector jobs since March 2012. (Jobs increased 204,000 in March 2012 according to ADP.)

BLS Jobs Numbers and Unemployment Summary to be Released Friday, September 7th.  Check back then!

July 2012 Jobs Numbers and Unemployment Rate Summary HERE!

The monthly jobs report from the private payroll processor ADP is usually seen as a bellweather of the national jobs report from the Bureau of Labor Statistics that  is released a couple of days later.  This morning's ADP report seems to indicate reasonable and increasing private-sector job growth.

From the ADP Report:

Employment in the U.S. nonfarm private business sector increased by 201,000 from July to August, on a seasonally adjusted basis. The estimated gain from June to July was revised up from the initial estimate of 163,000 to 173,000.

Employment in the private, service-providing sector expanded 185,000 in August, up from 156,000 in July.  Employment in the private, goods-producing sector added 16,000 jobs in August.  Manufacturing employment rose 3,000, following an increase of 6,000 in July.  

When attempting to make any sense of this ADP report, here are a few things to consider:

• This is an estimate based on ADP's survey of its payroll processing private-sector clients.  Over time, it moves in parallel with the government's BLS Establishment numbers, but it is not perfectly in synch with the government's numbers.  Also, the government reports may be more accurate in tallying small startups which may not be using a payroll processing service.  The ADP total numbers usually run about 300,000 to 600,000 lower than the BLS private jobs numbers in total jobs, not in increases or decreases of jobs.
• Though the ADP report runs parallel to the BLS numbers over time, they can be off in any one or two month period.  ADP numbers have shown more growth in the private sector economy than the BLS numbers for at least the past five individual months. Since September 2011, ADP has shown an increase of about 1,800,000 private sector jobs, whereas the BLS has shown an increase of only about 1,700,000 private sector jobs.
• To reiterate what I've been mentioning in these ADP summaries:  One of the things that seems to be more prevalent recently is that the stock market moves up or down not in concert with any reports of job growth (we haven't had any decline in total private jobs in over two years.), but in concert with reports of job growth compared to what the pundits THINK the reports should say.  This ADP report, if supported by BLS data, shows more job growth than the pundits expected, so stock futures turned positive after it was released.  As I write, the Dow Jones is up by 230 points.    
• The ADP report, which is a private report, can provide a check on the  government Bureau of Labor Statistics report.  Some claim that the BLS numbers may not be accurate because they are published by the government and, therefore, the report is somehow slanted or the government is somehow "cooking the books".  However, the private ADP reports from February through July showed 782,000 private jobs added in those five months, whereas the government BLS showed only 593,000 jobs added in that same timeframe. 
  

Small and medium service-providing companies add largest number of jobs.

The ADP report also shows that small (1-49 employees) and medium sized companies (50-499 employees) in the service-providing sector (vs. the manufacturing "goods-providing" sector) added the most jobs last month.  These segments were responsible for 166,000 of the 201,000 total added jobs.  This has been the trend for many months now.  Since March 2012, small and medium service-providing firms have added 680,000 jobs, and large service-providing firms firms have added about 72,000 jobs.

Hiring by large goods-producing firms backs off.

Small and medium goods-producing firms have continued to grow throughout 2012, but large goods-producing firms (with more than 500 employees) have been stagnant in 2012.  Hiring for these large goods-producing firms had picked up in July, but that sector lost 3,000 jobs in August.  The number of people working for large goods-producing firms is just about the same as it has been since February.  (3,527,000 people worked for large goods-producing firms in February vs. 3,525,000 people working in such firms now.)

Small and medium goods-producing firms added an estimated 19,000 jobs last month (up from 8,000 the month before).  Those small and medium goods-producing firms have added 84,000 jobs in total since February 2012.

Continued turnaround in Construction and Manufacturing; Financial Services continues to add jobs.

This report shows a continued turnaround in jobs in both Construction and in Manufacturing.  Construction rose for the third month in a row this summer, by 8,000 jobs in August, after declining for two months in the spring.  Manufacturing fell off in April and May, but has not added jobs for three months in a row.  The manufacturing sector added 3,000 jobs in August and 16,000 new jobs since May.

Financial services added 8,000 jobs last month.  This sector has now added jobs for 13 consecutive months.