ADP Jobs Report Shocks Prognosticators

ADP, the payroll company, has issued its jobs report which is its estimate for the number of jobs created or lost each month. ADP has inside information on this because they write the paychecks. Using the fluctuations in their clients payrolls as a statistical sample for the rest of the country, ADP puts out a job report that is on average within 30,000 jobs of the Labor Department report. For November, ADP estimates 189,000 private sector jobs were created in November. The latest Reuiters poll of economists showed an average prediction of 75,000 non-farm jobs created in November, according to the Wall Street Journal the average estimate was 50,000 nonfarm jobs. Some economists are revising their estimates upward but few, if any, are willing to admit that ADP is even within 75,000 jobs of what the Labor Department will report on Friday. From WSJ Realtime Economics, here is a round-up of adjustments made after the ADP report.

Paul Ashworth of Capital Economics says the ADP figure suggests a gain of 90,000 nonfarm jobs in the government report, but notes it “has been spectacularly wrong on more than one occasion in its short history.” Ian Shepherdson of High Frequency Economics says the ADP report “is the best single indicator of payrolls month-to-month, but it is still not very good” with a margin of error of about plus or minus 160,000. He raised his estimate for the official number to 125,000 jobs from 50,000. Morgan Stanley economists also raised their estimate for total November employment gains, to 100,000 jobs from an earlier forecast of 50,000.
Once again, I am going to be bullish and "take the over." I project that the ADP report will be within 30,000 jobs of the Labor Department report. Plus there should be about 20,000 government jobs added. So I am projecting 180,000 or more jobs created in November. I also project that if the number comes in that high, economists will complain that a lot of the jobs are temporary for the holiday season. This is sort of the jobs version of claiming Christmas shoppers are just bargain hunters. We can add that to my projection that retail sales in November will show a greater than 4% gain over 2006. The November retail figures are due to come out tomorrow and the labor report on Friday. So for the rest of the week I can look forward to either gloating or eating crow.