Employment Rises while layoffs remain constant

ADP employment rose by 42,000 in July, moderately above expectations and the sixth straight increase. June ADP employment saw a slight upward revision to 19,000 from an initially reported 13,000.


Service-producing employment rose 63,000 in July, however, employment in the goods-producing sector dropped 21,000 with manufacturing employment down 6,000 and construction employment down 17,000 (this was the smallest decline in construction employment since November 2007). Financial services jobs fell by 1,000 in July, the smallest decline since June 2007.

Challenger reported that the rate of layoff announcements was little changed in July with 41,676 job cuts announced versus 39,358 in June. Layoff announcements in July 2010 were 57.2% below July 2009’s level (the data are not seasonally adjusted).


BOTTOM LINE

The ADP report points to a modest increase in private payrolls in July and we see no reason to change our projection of a 100,000 increase in those payrolls. While the 42,000 gain in ADP payrolls is below our forecast for Friday’s number, we note that ADP reported a decline of 6,000 in manufacturing payrolls, while the ISM report on manufacturing pointed to a further rise in employment in the sector. Interestingly, the 17,000 decline in construction payrolls was the smallest since November 2007 (i.e., immediately before the onset of the recession). We now await the nonmanufacturing ISM report for further clues to Friday’s number.
Another low reading on layoff announcements—in the first seven months of 2010, layoff announcements totaled 339,353, a 65.9% decline from the first seven months of 2009

Challenger Layoffs

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