ADP jobs report shows loss of 491,000 for the month of April- surprise!!

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Subprime JD's picture
Subprime JD
Status: Platinum Member (Offline)
Joined: Feb 17 2009
Posts: 562
ADP jobs report shows loss of 491,000 for the month of April- surprise!!

This number caught me completely off guard.Ive heard that the government has been hiring people for the census so that could offset the job losses. Or, there is the possibility that companies are laying off less people as all the trillions that have been pumped into the banking/auto/insurance sector is offsetting the severe damage that should have been caused by the bursting of the credit bubble. Either way, the market will scream higher on friday if the BLS number is in the 500,000 range or lower.

Believe me im not for more people getting layed off and i do want my country to be strong and economically healthy. We who have done the research know the numbers, how much debt people are drowning in, the weakness of the dollar, americas desperate oil addiction, ect ect. This deleveraging process will take much longer than it should becuase of Mr. Bernanke and the foreign central banks that keeping buying 1/3 of the treasury issuance. The status quo must be maintained at all costs.

 

Oil hit 56 today. If we have a bounce in the economy 80 dollar oil is easily in sight.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5569
Re: ADP jobs report shows loss of 491,000 for the month of ...

Some important background on the ADP report from Barry Ritzholtz' excellent site which came out last February (09):

ADP has put together a fairly miserable track record in forecasting BLS job data. This month, they have, once again, revamped their methodology in an attempt to more closely track BLS data, which they claim after the BLS revisions one year later their data will match up.

Why? Why is that goal is even remotely desirable?

ADP has their own proprietary data sources; they track employees (new and existing), they can track payroll dollars (total gains and losses, and per employee changes), off of the actual payroll checks going to employees. Why try to imitate the BLS output each month? ADP can create a very specific set of reports that ARE PURELY DRIVEN BY THEIR OWN PAYROLL RECEIPTS, that stands on its own.

Why even bother messing around with trying to imitate or forecast BLS data?

The BLS Non-Farm Payroll numbers are somewhat flawed, subject to massive revisions, and fatally flawed due to how the Birth Death adjustment has been applied.

If ADP wants to contribute something valuable, they should stop trying to forecast BLS, and instead generate their own, proprietary, data driven monthly NFP numbers.

Consider how NFP lags the end of recessions, continuing to be negative long after the recovery begins. Employers often expand output without new hiring: They offer full time employment to part–time workers, and offer overtime to full timers. ADP can track that, and capture a real time improvement in the economy long before it shows up in the BLS data.

Inquiring minds want to know: Why bother aping a data series that is not particularly helpful in real time?

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