The relatively fluctuating household survey employment series and Preliminary Baseline Adjustment Series of Philadelphia Fed Estimates Employment is suggested to be flat in Q2 (though not Q1); see chart here postal. Today’s ADP data on private nonfarm payrolls (NFP) suggest otherwise, given the relatively small change in government employment over the relevant period.
figure 1: Cumulative change in private nonfarm payrolls relative to 2021M12, from BLS (blue), Bloomberg Consensus 1/5 (blue+), ADP (purple), and QCEW private covered employment, by author using X-13 (orange) Seasonally adjusted, both in 000s, sa arrows/numbers indicate changes between 2022M03 and 2022M06, in 000s. Hypothetical 2022H1 recession peak-to-trough recession shaded mauve. Sources: BLS, ADP via FRED, Bloomberg, BLS and authors’ calculations.
Note that the ADP showed 1.2 million net new private jobs, compared to 1 million in the March-June period, rather than essentially zero as indicated by the total nonfarm payrolls (during which period, the BLS was only shows 55,000 net new government jobs, so the change in private NFP almost translates to total NFP). QCEW private payrolls also rose by 1.5 million, although results depend on the method of seasonal adjustment; using the geometric moving average, they rose by 98,000.
Since ADP uses a completely different sample and is not calibrated to match the BLS institutional series (in its modified methodology), I find that private NFPs likely increased substantially in the second quarter.
So is this a seasonal adjustment issue? Here’s the corresponding chart for the unseasonally adjusted data.
figure 2: Cumulative change in private nonfarm employment relative to 2021M12, from BLS (blue), ADP (purple), and QCEW private covered employment (orange), all in 000s, sa arrows/numbers indicate change between 2022M03 and 2022M06, in 000 means. Hypothetical 2022H1 recession peak-to-trough recession shaded mauve. Source: BLS, ADP via FRED, BLS and author’s calculations.
The 2.5 million QCEW change is indeed smaller than the 3.1 million BLS agency survey series; but the difference is 600,000, not more than a million.
So, bottom line:
- In 2022H1, employment will rise.
- Private nonfarm payrolls are likely to rise in the second quarter of 2022.
And I (still) doubt that there will be a recession in the first half of 2022.
