ADP has changed the format of their National Employment Report. It is no longer intended to serve as a forecast to the BLS' Non-Farm Payrolls Report and is an "independent measure of labor-market data". The report is now conducted using new methodology and is based on ADP actual payroll transactions from more than half a million companies to provide a nationally representative measure of employment. Data using the new methodology is available from 2010 forward. For more information, check out their FAQ's.
The economic mover and shaker this week is Friday's employment report from the Bureau of Labor Statistics. This monthly report contains a wealth of data for economists, the most publicized being the month-over-month change in Total Nonfarm Employment (the PAYEMS series in the FRED repository). However, each month a few days before we receive the highly anticipated jobs report, ADP releases their data on new nonfarm private jobs.
The ADP employment report showed that 278K nonfarm private jobs were added in May, a slowdown from the 291K jobs added last month. The latest figure is well above the forecast of 170K new private jobs.
The forecast for the forthcoming BLS report is that 160,000 private nonfarm jobs were added last month. However, the forecast for the full nonfarm jobs (the PAYEMS number) is for 180,000 jobs to have been added. Here is a visualization of the two series over the previous twelve months.
Here is an excerpt from today's ADP report press release:
“This is the second month we've seen a full percentage point decline in pay growth for job changers,” said Nela Richardson, chief economist, ADP. “Pay growth is slowing substantially, and wage-driven inflation may be less of a concern for the economy despite robust hiring.”
Here is a snapshot of the monthly change in the ADP headline number since the company's earliest published data with the new methodology in 2010. This is quite a volatile series, so we've plotted the monthly data points as dots along with a six-month moving average, which gives us a clearer sense of the trend. The latest six-month moving average is 224,000, up from last month's 213,000.
As we see in the chart above, the trend peaked in September 2015 and then went negative for the first time in late 2019, just before the NBER declared a recession start. The COVID-19 pandemic has brought employment numbers down to levels we have never seen this century. The trend reached a new high in 2021 at 778,000 and has recently dropped back to pre-pandemic levels.
