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ADP: Job Growth Modest

August 03 2011

Private-sector employment rose by 114,000 in July, seasonally adjusted, according to the national employment report released today by Automatic Data Processing Inc. (NASD: ADP). June’s employment growth was revised downward to 145,000, from the initially reported 157,000.

Employment in the service-providing sector rose by 121,000 in July, marking 19 consecutive months of employment gains. Employment in the goods-producing sector fell by 7,000 in July, its second decline in three months.

“Today’s report shows modest job creation for the month of July at a rate of half what is needed for meaningful employment and economic recovery,” said Gary  Butler, CEO of ADP.

“This gain of employment growth is moderately above the consensus forecast for Friday’s jobs number from the [U.S. Bureau of Labor Statistics], and this pace of job creation usually implies a steady unemployment rate” said Joel Prakken, chairman of Macroeconomic Advisers LLC, which helps produce ADP’s employment report. “However, employment [growth] is decelerating. … The three-month percent change has declined every month, from 0.60 percent [in February] to 0.27 percent in July.”

“The slowdown in employment makes more sense in light of last week’s revised GDP numbers showing the economy grew slower late last year and this year than initially reported,” Prakken said.

Small businesses, those with fewer than 50 workers, added 58,000 jobs in July. Large businesses, those with 500 or more workers, gained 9,000 jobs while midsize businesses added 47,000.

The ADP report is derived from a sample of approximately 340,000 U.S. business clients representing more than 21 million U.S. employees.

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