ADP has announced a new methodology for reporting payrolls, and has made some huge revisions to figures over the last year. Their justification:
The ADP Research InstituteSM, working in close collaboration with Moody’s Analytics and its experienced team of labor market researchers, has enhanced the monthly ADP National Employment Report® to more closely align with the final, revised U.S. Bureau of Labor Statistics (BLS) job numbers.
The New Methodology
Beginning with its November 1, 2012 report, the ADP National Employment Report’s new methodology now utilizes ADP payroll data, U.S. BLS employment data, and the Philadelphia Federal Reserve Bank’s Aruoba-Diebold-Scotti Business Conditions Index. The new methodology includes a larger sample size of ADP clients (up from 344,000 U.S. companies to 406,000), a larger population of employees (up from 21 million employees to 23 million, which accounts for more than 20 percent of all U.S. private sector employees), five company-size classes and and five industries (both increased from three, respectively). This larger data set is expected to help enable the ADP National Employment Report to more closely match the final, revised job numbers published by the BLS.
So if the new methodology is really better, then the old one must have sucked since everything had to be revised by so much.
Moving on, ADP employment in October is projected for 158k new payrolls. This is composed of small businesses (1-49 employees) +50k, medium businesses (50-499 employees) +27k, and large businesses (500 or more employees) +81k.
We’ll see in tomorrow employment situation report from the BLS just how accurate this new methodology from ADP really is.