Credit: Shutterstock photoLast week the Bureau of Labor Statistics (BLS) re-estimated their historical employment growth. This allows an analysis of the monthly job growth estimates by the BLS and ADP - as well as the opportunity to continue bashing the way we estimate employment.
You cannot manage anything when the information one is seeing is not correct. The USA data gathering systems are only estimates and extrapolations. Can you imagine what would happen if a CEO of a company was told that the company has "about $10 million of cash available" or "we estimate 2,000 widgets were built" - and this data was given with a 15 day delay and included an estimated error factor.
In the latest case - the employment re-estimate was revised well into the 20th century. Honestly, this gives one less confidence in any employment data even though the revisions were relatively small. From the BLS:
To get a feel of the benchmark changes:
Change in Seasonally Adjusted Non-Farm Payrolls Between Originally Reported (blue bars) and Current Estimates (red bars)
The graph below compares the new benchmarked BLS seasonally adjusted non-farm PRIVATE employment data to the original published monthly seasonally adjusted non-farm PRIVATE employment estimates for the BLS establishment survey, the BLS household survey, and ADP .
ADP says their methodology is geared to estimating the FINAL BLS employment.
If this is true, ADP failed again this year. I do not understand why ADP wants to estimate BLS employment - and why they are not publishing an alternative estimate of jobs growth. Even the BLS publishes two different employment growth numbers monthly (even though the headlines only discuss one of them).
As we are just guessing and extrapolating employment data - the more guesses the better. When the statistical sample size increases the uncertainty in the average becomes smaller. Wouldn't we be better off if there were 3 or 4 (or more) independent estimates of employment?
Other Economic News this Week:
The Econintersect Economic Index for February 2016 declined again, and is barely positive - and still remains at the lowest value since the end of the Great Recession. The tracked sectors of the economy which showed growth were mostly offset by the sectors in contraction. Our economic index remains in a long term decline since late 2014.
Current ECRI WLI Growth Index
The market (from Bloomberg) was expecting the weekly initial unemployment claims at 272 K to 290 K (consensus 281,000) vs the 269,000 reported. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 284,750 (reported last week as 284,750) to 281,250. The rolling averages generally have been equal to or under 300,000 since August 2014.
Weekly Initial Unemployment Claims - 4 Week Average - Seasonally Adjusted - 2011 (red line), 2012 (green line), 2013 (blue line), 2014 (orange line), 2015 (violet line)
Bankruptcies this Week: Noranda Aluminum Holding, Privately-held Sundevil Power
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
