Global| Oct 01 2020Employment Data: What Accounts for the Big Gap Between ADP and the Official Jobs Data?
Summary
September's ADP employment report showed a gain of 749,000, following gains of 481,000 in August and 216,000 in July. While the focus of this month's report is on the large September's gain, the bigger issue is why ADP did not revise [...]
September's ADP employment report showed a gain of 749,000, following gains of 481,000 in August and 216,000 in July. While the focus of this month's report is on the large September's gain, the bigger issue is why ADP did not revise up the July and August figures to be more in line with the published private payroll figures.
The ADP employment report is designed to measure the change in private payroll employment. It's not perfect, but the ADP jobs number are derived from actual payroll data. According to ADP, the raw payroll data accounts for about 20% of the total private payroll count.
In Q3, the ADP employment showed a three- month gain of 1.45 million. That's 1 million below the 2.5 million private payroll gains reported for July and August by the Bureau of Labor Statistics (BLS). And the September figures are yet to be released.
The month following the release of the employment data from BLS, ADP usually revises it previously reported job data to be in line with the official stats. Back in June, ADP reported an increase of 2.369 million private-sector jobs. One month later, ADP revised (upward) the June figures to 4.485 million to be more in line with the official stats that showed a gain 4.729 million.
ADP has not offered any reason why the July gain of 216,000 (versus the official figures of 1.481 million) and August gain of 481,000 (versus the official figures 1.027 million) were not re-aligned that has been the normal practice in the past.
The gross federal withheld tax data for July and August were off 15% from year-ago levels. The weakness in tax receipts raised questions over the accuracy of the official figures.
The consensus estimate for September payrolls is a gain of 800,000. That would increase the gap between ADP and private payrolls in Q3 to nearly 2 million. That raises the question are the gains in private payrolls overstated or the ADP gains understated? Tax receipts lean towards ADP figures.
Viewpoint commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
Joseph G. Carson
AuthorMore in Author Profile »Joseph G. Carson, Former Director of Global Economic Research, Alliance Bernstein. Joseph G. Carson joined Alliance Bernstein in 2001. He oversaw the Economic Analysis team for Alliance Bernstein Fixed Income and has primary responsibility for the economic and interest-rate analysis of the US. Previously, Carson was chief economist of the Americas for UBS Warburg, where he was primarily responsible for forecasting the US economy and interest rates. From 1996 to 1999, he was chief US economist at Deutsche Bank. While there, Carson was named to the Institutional Investor All-Star Team for Fixed Income and ranked as one of Best Analysts and Economists by The Global Investor Fixed Income Survey. He began his professional career in 1977 as a staff economist for the chief economist’s office in the US Department of Commerce, where he was designated the department’s representative at the Council on Wage and Price Stability during President Carter’s voluntary wage and price guidelines program. In 1979, Carson joined General Motors as an analyst. He held a variety of roles at GM, including chief forecaster for North America and chief analyst in charge of production recommendations for the Truck Group. From 1981 to 1986, Carson served as vice president and senior economist for the Capital Markets Economics Group at Merrill Lynch. In 1986, he joined Chemical Bank; he later became its chief economist. From 1992 to 1996, Carson served as chief economist at Dean Witter, where he sat on the investment-policy and stock-selection committees. He received his BA and MA from Youngstown State University and did his PhD coursework at George Washington University. Honorary Doctorate Degree, Business Administration Youngstown State University 2016. Location: New York.
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