Monthly employment data from the Bureau of Labor Statistics and ADP often show differences in their figures, yet they follow the same direction over extended periods. This alignment provides a reliable view of the US labor market despite short-term variations. Jobs information is key to understanding consumer spending, which drives about two-thirds of the US economy.
The Bureau of Labor Statistics (BLS) releases monthly employment data that influences markets and policy decisions. This information offers insights into consumer spending, responsible for roughly two-thirds of US economic activity, and hints at future corporate earnings and broader economic conditions. Such data affects Federal Reserve policies, as well as movements in currencies, equities, and commodities.
ADP, a global human capital management company, produces the National Employment Report (NER), which draws from real-time payroll data of more than 500,000 firms and over 26 million employees, covering about 20% of US private employment. The NER focuses on nonfarm private employment and appears two days before the BLS report, giving an early indicator of trends.
In contrast, the BLS uses a survey method involving around 121,000 private firms and government agencies, including small businesses with fewer than 20 employees, which make up about 45% of its establishment survey. The BLS headline figure includes both private and government jobs, averaging 22 million more workers than ADP's count. A more direct comparison arises when looking at BLS private sector data alone, which shows only 1.26 million more workers on average.
Both datasets aim to determine if the US economy is expanding or contracting in jobs. While monthly reports can diverge, producing conflicting headlines, longer-term analysis reveals they trend similarly. For instance, six-month rolling correlations fluctuate between positive and negative values, reflecting short-term noise. However, five-year rolling correlations demonstrate a steady positive relationship with less variation.
These employment metrics, combined with measures like the U3 unemployment rate and the broader U6 underemployment rate, provide complementary views useful for gauging interest rates, Federal Reserve actions, and directions in equities, commodities, and forex markets.
