Payroll processor ADP’s report on the job market in April may have been inflated due to technical issues.
Moody’s Analytics Chief Economist Mark Zandi told CNBC that the private sector hiring number for April, which was reported as 275,000 (100,000 more than expected), was not an accurate number. Blaming technical factors, the economist said a low reading from ADP’s own payroll data, a low level of unemployment claims in April and the high volatility with the monthly job data from the Bureau of Labor Statistics threw the number out of whack.
According to CNBC, non-farm payrolls have been volatile in 2019. January job gains totaled 312,000; February saw 33,000 and there were 196,000 in March. Zandi said in a subsequent interview that the ADP number overstates the strength of the economy.
“Bottom line, I don’t think it’s going to come in at 275,000. My sense is it’s going to come in pretty close to consensus [at] 175,000 to 200,000,” he said, noting the three technical issues are pumping up the reading. “When trying to predict this month’s change, we also look at recent history. If you’re in a period of strong job growth, that will affect your estimate. If you’re in a period of weak job growth, that will affect your estimate. And if you have a period of extraordinary volatility, that’s also going to show up in the number, and that pumped up the [ADP] number.”
Earlier Wednesday (May 1), ADP said private-sector employers hired 275,000 employees in April, surpassing the forecast by economists for 180,000 hires. ADP said the jobs were concentrated in the service sector, which represented 223,000. Natural resources and mining were the only two sectors to lose jobs in April. ADP said small businesses added 77,000 jobs, while medium-sized companies were responsible for 145,000 jobs and big companies hired 53,000. The Labor Department will report non-farm payroll numbers for April on Friday (May 3).