Ezra Klein blog: ADP: We added 158,000 jobs in October

[flpoljunkie]

ADP: We added 158,000 jobs in October
Posted by Dylan Matthews on November 1, 2012

ADP, the big payroll processing firm, has put out its October numbers in advance of Friday’s jobs report, and they’re pretty promising: 158,000 new jobs created, though their September number was revised down to 114,000 (coincidentally, exactly the Bureau of Labor Statistics’s number) from a first guess of 162,000.

Normally, ADP is treated as the red-haired stepchild of the Bureau of Labor Statistics report: at best a good first guess, but not definitive at all. But as we detailed last month, ADP regularly does a better job predicting the final, revised BLS jobs numbers than BLS’s first report does.

Since December 2007, ADP has been off by an average of 69,857 jobs, while BLS itself has been off by an average of 78,694 jobs. And ADP’s average error would be much lower if not for a couple of extreme outliers, like the June 2010 report:



ADP switched to a new methodology this month, which relies on a different macroeconomic model (built by Moody’s Analytics rather than Macroeconomic Advisors) and uses a bigger sample. So it’s hard to say whether they still have the same predictive power. But if they do, Thursday’s report is arguably more meaningful than the one coming out Friday.

http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/11/01/adp-we-added-158000-jobs-in-october/

[jschurchin]

1. I think the biggest cause of discrepancy between ADP and BLS

is BLS includes public sector employment, i.e. Government, while ADP is strictly private sector. None the less, although this number isn't great it is a positive indication that we are not contracting, which is a good thing.

[flpoljunkie]

2. Yes, BLS reports net jobs numbers--private sector minus public sector losses--altho last month

there were gains in government jobs.