The ADP employment report released on Wednesday points to a huge drop in non-farm payrolls in the month of December. Note that whilst the ADP report has generally been underestimating the extent of job losses reported by the BLS, they have revised their methodology so that it is now more correlated with the BLS numbers. From the report:
Nonfarm private employment decreased 693,000 from November to December 2008 on a seasonally adjusted basis, according to the ADP National Employment Report®. This month’s ADP Report incorporates methodological improvements intended to improve the correspondence between the nonfarm private employment estimates shown in the ADP Report and estimates published in the Bureau of Labor Statistics’ Employment Situation Report.
December’s ADP Report estimates nonfarm private employment in the service-providing sector fell by 473,000. Employment in the goods-producing sector declined 220,000, the twenty-third consecutive monthly decline. Employment in the manufacturing sector declined 120,000, marking its twenty seventh decline over the last twenty eight months.
Large businesses, defined as those with 500 or more workers, saw employment decline 91,000, while medium-size businesses with between 50 and 499 workers declined 321,000. Employment among small-size businesses, defined as those with fewer than 50 workers, declined 281,000. Sharply falling employment at medium- and small-size businesses clearly indicates that the recession has now spread well beyond manufacturing and housing-related activities.
Estimating the non-farm payroll numbers has always been a guessing game but as the losses become larger it becomes even more so. As usual watch for the revisions to prior months as well as the headline number on Friday when the BLS releases it's report.