U.S. Employment Data: A Curious Divergence

financialarmageddon.com / By Michael Panzner / February 10, 2013

From Panzner Insights:

Each month, the Bureau of Labor Statistics and Automatic Data Processing, Inc. detail what is happening in the jobs market. Although the tallies of monthly changes reported by each side are often out of kilter, their respective private nonfarm payroll totals have since the end of 2000 moved largely in tandem.

From December 2000 through December 2011, the median monthly gap between the two was 78,000, or 0.07 percent of the total. The largest reported difference was seen in November 2002, when the BLS total was 394,000, or 0.36 percent, higher than its ADP counterpart.

But as the chart shows, there has been a big change. From January 2012 through last month, the spread between the two series has widened dramatically as the BLS tally rose at a faster pace than the one reported by ADP. Over the span, the median differential was 614,000 jobs, or 0.55 percent. The minimum differential was 396,000, or 0.36 percent, in January 2012, while the maximum was 809,000, or 0.72 percent, in December 2012.

One possible reason for the disparity is that either the BLS or ADP altered the methodology they relied on in the previous 11 years and that statisticians on the other side have not yet cottoned on. While this is possible, I find it hard to believe that those who crunch the numbers for such an important data series would not be quick to incorporate an updated approach in their own calculations.

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