BLS Private nonfarm payrolls up 444K vs. ADP down 301K vs. +150K consensus (Bloomberg), with big revisions to previous months. A lesson in not over-reading the ADP series (see employment situation release).
Figure 1: BLS private nonfarm payroll employment from January release (bold gray), December release (black), Bloomberg consensus as of 2/1 (teal square), ADP (red). Source: BLS, Bloomberg, and ADP via FRED.
Note that there is a big change in the levels of employment throughout 2021; that’s because the January release incorporates the annual benchmark revision, the process of which is described in the release.
ADP private nonfarm has not tracked BLS private nonfarm very well in levels; and not in differences either, in recent months. (See this post for pre-covid era analysis.)
Figure 2: Change in BLS private nonfarm payroll employment from January release (bold gray), from December release (black), Bloomberg consensus as of 2/1 (teal square), ADP (red). Source: BLS, Bloomberg, ADP via FRED, and author’s calculations.
The US (total) nonfarm payroll 95% confidence interval is +/- 110K (BLS). If the private NFP confidence interval is of similar size, then we can be pretty confident that the actual change was positive.
Further note that December and November changes in employment were revised substantially upward, in this benchmark revision.
In terms of revisions of January employment, going forward, we can look to the recent past. For 2021, mean absolute revisions to (total) nonfarm payroll employment going from 1st to 2nd release was 100K (as documented here). We don’t have the entire year’s data for going from 1st to 3rd yet. See additional discussion of revisions in recent years, see this post.
While the number constituted a big positive surprise, and was outside the 60% prediction interval from my ad hoc BLS-ADP regression (discussed in this post), it was within the 95% prediction interval, thereby confirming the limited informational content of the ADP private NFP for the BLS private NFP.