This high number of ADP jobs could give an inaccurate picture

The chief economist of Moody's Analytics, Mark Zandi, said that technical problems could have given the ADP report on the April job market a much more solid appearance than ever before. He was not really there.

Earlier Wednesday, the ADP report with Moody's announced that 275,000 people were hired in the private sector in April, about 100,000 more than expected.

Shortly after the publication, Zandi said on CNBC that technical factors may have inflated this figure.

He then detailed three components of the ADP number that were unusually volatile or offline. One of them was a very weak reading of the ADP payroll data. Another factor is the very low level of unemployment claims in April, which reached its lowest level in 50 years. The third was the high volatility of recent monthly job data published by the Bureau of Labor Statistics.

In the ADP press release, Zandi said this figure overestimated the strength of the economy.

"In the end, I do not think it will reach $ 275 000. I think the result will be close to the consensus between 175 000 and 200 000," he later said at the time. ;a telephone interview.

The ADP payroll number is sometimes close to the non-farm payroll report, and sometimes not. Nevertheless, Wall Street monitors it as a measure to watch before the monthly jobs report, usually released two days later.

Zandi said that he does not normally qualify the number. "I did it because there are three technical problems at play that conspired to pump it," he said.

"We take the number of the ADP, other economic variables and use it to estimate the number of BLS." The ADP number was unusually low compared to what we saw in recent history, years, "he said.

At the same time, the very low number of job applications submitted during the survey week offset the low number of ADP payrolls. And that inflated the number. Another factor is the number of 275,000 ADP includes a historical part of the government's reports.

"When we are trying to predict this month's change, we are also looking at recent history, if you are in a period of strong job growth, it will affect your estimate, and if you have a period of volatility. extraordinary, this will also appear in the number, and that has inflated the [ADP] number, "he said.

Zandi said that there were often technical factors around the number, but that it was an extreme case.

"It's an estimate, I could adjust it, but I did not want to do that, I did not think it was appropriate," he said. "I thought it was important to provide context."

The non-agricultural workforce, published by the government, has been extremely volatile this year. 312,000 jobs were created in January; February was 33,000 and 196,000 jobs were created in March.

As for the government's report on Friday, Zandi said that he could contain his own quirks. For example, the government's report could theoretically be inflated by enumerators added to the government's payroll in April or May.

"It could be a few hundred thousand people," he said.