Here’s Why ADP Says Its Jobs Numbers Were So Different From the Government’s

ADP Research Institute said U.S. companies had added 568,000 jobs last month. On Friday, a Labor Department report showed they’d added 317,000.

The gap — a difference of 251,000 between the two data points — is attributable to a miss in the leisure and hospitality sector, according to ADP Chief Economist Nela Richardson. Her firm saw the sector continuing to lead the jobs recovery, and though it did play a role in the government report, it wasn’t as great as what she had expected.

“All of this is underscored by the fact that this is a really tumultuous labor market,” Richardson said on Bloomberg’s “QuickTake Stock” broadcast on Friday. “It’s very hard to distinguish permanent layoffs from temporary layoffs, and that causes estimation challenges for ADP and BLS, as you can see by that very sizable August revision,” she said, referring to the Bureau of Labor Statistics. 

Richardson added that ADP’s revision for August put it more in line with that month’s government figure. Including government employment, U.S. job growth in September was the slowest this year, rising just 194,000, Friday’s data showed.  

Meanwhile, Wednesday’s ADP report showed businesses’ payrolls increased by 568,000 in September, led by leisure and hospitality, after a revised 340,000 gain in August. Last month’s number was higher than forecast and was the biggest since June. Sponsored ContentCapitalism With a HeartYokogawa

The Labor Department data also showed the unemployment rate fell to 4.8%, partly reflecting a decline in labor force participation among women. Some economists took that as a sign of tempering in the labor-market recovery. 

Richardson, who joined ADP last year, said many economists have been making a lot of assumptions, including that the falloff of unemployment benefits would help the labor market recover, a factor that was never guaranteed to have effects. The pandemic has always been in the driver’s seat, she said. 

“We thought at the beginning of the year all you have to do is turn on the lights of the economy, you can contain the pandemic, and you can see naturally this flow-back,” she said on the streaming program. “All of this, to me, signifies there’s bottlenecks in the hiring process — from the time the job is open to the time the job is filled, there’s at least 10 steps and in those 10 steps, people are falling through the funnel,” she said, adding “so there is more than what you would think going on at first blush.”

— With assistance by Ritika Gupta

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