Who’s Zooming Who?

Posted by on November 7, 2015 - 8:57 am

I couldn’t help but sing the song “Who’s Zooming Who” after the release of the monthly BLS report. Here are two separate headlines just 24 hours apart from U.S. News & World Report:

ADP Report Latest Sign of Cooling Job Market

Stellar October Jobs Report Blows Expectations Away

How could two separate reports be so different (and of course the “Don’t Worry, Be Happy” crowd ran with the BLS one)?

Few economic releases elicit as much reaction from both the stock and bond markets as the employment reports issued by Automatic Data Processing (ADP) and the Bureau of Labor Statistics (the BLS). So how then could they show such a dramatic difference just 24 hours apart?

  • The ADP (ADP) estimate includes only private non-farm payrolls, while the BLS estimate includes both private and government non-farm payrolls.
  • The ADP releases just one estimate for non-farm payrolls addition, while the BLS releases an initial figure that’s revised twice to include results from companies that sent their responses late. The first BLS estimate includes results from ~70% of the survey size, while the second and third revisions include an additional 20% and 1% to 2% of survey responses, respectively.
  • Although the ADP data base and survey methodology are different from the sample used to compute the non-farm payrolls report issued by the Bureau of Labor Statistics (the BLS), ADP has estimated the data correlation between the private payroll additions reported in the ADP-NER and the final BLS Employment Situation report at ~0.96.

John Crudele of the NY Post has been an outspoken critic of the BLS and has made a very good argument that they can’t be trusted. Imagine that, something run by the government that can’t be trusted. Look for major downward revisions in the coming months but by then, the “Happy” will have long completed their mission.

Meanwhile, earnings (I know it’s hard to believe there are actually other factors other than the FED that influence stock prices) are putting in one of their poorest results in several years and a very dependable business barometer for world trade is screaming bearish. But hey – Don’t Worry, Be Happy!

And don’t let a little matter like the national debt left out of control get in the way. Just “BOO-YAH” baby!

 

 

Posted in: Matters of Finance, News

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