ADP employment revamp more accurate, not stronger

The number of jobs added to the U.S. economy each month is a barometer of how consumers and potential homebuyers are faring in today's environment.

But getting those job numbers right – or even to a point where there's agreement across [2] the board – seems to be an exercise in futility.

Human Resources firm Automatic Data Processing plans to launch its October private sector jobs report on Thursday. The new formula ADP uses for its job calculations is supposed to make the findings more in line with private sector, non-farm payroll figures from the government.

Capital Economics responded to this idea saying "recent changes to the way ADP calculates its measure of employment means it now has an even closer historical relationship with the official payroll data. But what really matters is whether it is a more accurate real-time predictor of the initial payroll estimate."

Yes, but will the more accurate numbers provide stronger information on the whole? Not when you consider that, before the revamp, the ADP numbers weren't that far off to begin with.

The new ADP job calculation method will use data from Moody's Analytics, in order to give a more accurate number.

But, Capital Economics says the "old ADP data appeared to overstate the recent strength of employment gains." The research firm says the Bureau of Labor Statistics actually revised its March 2012 job gains report upward, suggesting ADP's more optimistic report from earlier in the year was more accurate than initially presumed.

ADP reported that the private sector added [3] 162,000 jobs in September, while the Bureau of Labor Statistics reported 114,000 employment gains for the same period.

kpanchuk@housingwire.com [4]