>

ADP and Challenger: Strong Employment Gains

Before this week is over, the USA January jobs picture should be complete – but the first bulls out of the pen – paycheck processor ADP and outplacement firm Challenger, Gray & Christmas provide data that is consistent with a strongly expanding economy.

ADP’s National Employment Report for January 2011 shows private nonfarm payroll employment growing 187,000, and revised last month’s massive increase down 17% to 247,000.  Their press release in part:

Private-sector employment increased by 187,000 from December to January on a seasonally adjusted basis, according to the latest ADP National Employment Report® released today. The estimated change of employment from November to December was revised down by 50,000 to 247,000 from the previously reported increase of 297,000.
This month’s ADP National Employment Report suggests solid growth of private nonfarm payroll employment heading into the New Year. The recent pattern of rising employment gains since the middle of last year appears to be intact, as the average gain over December and January (217,000) is well above the average gain over the prior six months (52,000). Strength was evident within all major industries and across all size business tracked in the ADP Report.

According to the ADP Report, employment in the service-providing sector rose by 166,000 in January, marking twelve consecutive months of employment gains. Employment in the goods-producing sector rose 21,000, the third consecutive monthly gain. Manufacturing employment rose 19,000, also the third consecutive monthly gain.

Employment among large businesses, defined as those with 500 or more workers, increased by 11,000 while employment among medium-size businesses, defined as those with between 50 and 499 workers, increased by 79,000. Employment among small-size businesses, defined as those with fewer than 50 workers, increased by 97,000.

In January, construction employment dropped 1,000. The total decline in construction employment since its peak in January 2007 is 2,311,000. Employment in the financial services sector increased 3,000 in January.

The ADP data shows strength in all sectors with the small and medium size service sector showing large expansion.

Next month (March 2011) with its data release, ADP will normalize its data to BLS as part of its annual revision.  To date, since the last yearly ADP revision – the BLS has been accumulating more jobs.

ADP’s release is issued coincident with the December 2010 layoff press release from global outplacement firm Challenger, Gray & Christmas, Inc.   The importance of the Challenger release is that it offers a picture into the corporate world showing whether layoffs are ongoing.  Their release in part:

The slow pace of downsizing that marked the second half of 2010 appears to be continuing into 2011, as employers announced plans to cut 38,519 jobs in January. While that is an increase from the previous month, it marks the lowest January total on record, according to the report released Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc.

January job cuts were up 20 percent from December, when planned layoffs totaled 32,004; the lowest monthly figure since June 2000 (17,241). Compared to a year ago, however, last month’s job cuts were down sharply, falling 46 percent from the 71,482 job cuts recorded in January 2010.

The 38,519 job cuts last month represents the lowest January total since Challenger began tracking monthly layoff announcements in 1993. Historically, January is the heaviest job-cut month. From 1993 through 2010, employers announced an average of 104,560 job cuts to start the year. October, the next largest job-cut month, saw an average of 84,218 cuts over the same period.

“It is not unusual to see job cuts increase in January. In fact, 2011 marks the fifth consecutive year and the tenth out of the last twelve in which January job cuts surpassed the December total. What made this January figure so unusual is that it was so low. Even in the 1990s, when annual job cuts were relatively low, January still averaged more than 74,000 job cuts,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Last month’s job cuts were led by employers in the government and nonprofit sector, which announced 6,450 planned reductions in staff. That was nearly double the 3,276 job cuts announced in December, but slightly lower than the 6,586 planned layoffs announced by these organizations a year ago.

“The government and non-profit sector has, of course, struggled immensely throughout the recession and into the recovery. The sector had the second largest number of planned layoffs in 2009 and the largest number of cuts last year, by a wide margin. Unfortunately, there are no signs of a turnaround in 2011. In fact, a growing number of states are approaching a point where it could become necessary to declare bankruptcy, which will likely lead to further job cutting,” said Challenger.

Retailers had the second largest number of job-cut announcements in January, as these employers announced plans to eliminate 5,755 jobs. That is up nearly 17 percent from 4,937 job cuts in December, but it is well below the post-holiday downsizing that occurred in 2010, when retail job cuts totaled 16,737 in January. In January 2009 these firms shed 53,968 workers, following one of the worst holiday sales seasons in retail history.

Retail is definitely on the rebound, which is good news for the entire economy, as it indicates that consumers are ready to start spending again. Over the last six months of 2010, monthly retail job cuts averaged just 2,095, down from 4,364 in the first half of last year. In 2009, job cuts in the sector averaged 8,234 per month,” noted Challenger.

Econintersect has warned that data distortions are occurring because of the hard winter weather occurring.   However, the Challenger release confirms an expansion cycle is underway regardless of any distortions which are embedded in the ADP data release.  It is interesting to note that the combined ADP job growth over the past two months has been at an annualized rate above 2.6 million per year.  This is approximately double the 1.3 – 1.5 million needed to keep up with population growth.  If this continues we are starting to build a ramp to start getting out of the deep unemployment hole produced by The Great Recession.

Friday, the BLS jobs data will be released – and Econintersect will do a full comparison between the ADP data and the BLS data.

Share this Econintersect Article:
  • Print
  • Digg
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
  • LinkedIn
  • Wikio
  • email
  • RSS
This entry was posted in Employment and tagged , , , , , , . Bookmark the permalink.










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.