Private Nonfarm Payroll (NFP) payrolls came in slightly below consensus (172K vs. 179K). There has been some discussion of the possible overstatement of private nonfarm payroll growth in the CES, possibly due to distortions associated with the firm birth/death model. Here I compare the official series to some other measures that are less susceptible to this criticism.
figure 1: Private Nonfarm Payrolls, from CES (bold blue), Bloomberg 8/4 consensus (red squares), from ADP (purple), from authors using X13-adjusted QCEW on record series (sky blue), from authors using Geometrically adjusted QCEW moving average (orange), from Business Employment Dynamics (BED) (light green squares), from Philadelphia Fed Early Benchmark (magenta), all 000, Philly Fed total private nonfarm payrolls obtained by subtracting CES Estimated by measuring government employment. BED levels are calculated by accumulating the quarterly net change in private NFP reported in September 2021. Sources: BLS July 2023 Employment via FRED, ADP via FRED, BLS-QCEW, BLS-BED, philadelphia fedBloomberg, and author’s calculations.
While the QCEW-based series (adjusted by the authors) shows a clear plateau at the end of 2022, the BED-based series (relying on the same underlying data) does not (although, as Steven Englander, the increase is not as large as the CES series). Also, the Philadelphia Fed’s early benchmark continued to rise in April. Finally, the ADP series (calculated using ADP’s own payroll processing data) shows a continued rise throughout April (and even into July). Potential flaws of the birth/death model are independent of all these alternative measures.
So while it’s impossible to pinpoint the level of employment, private nonfarm payroll growth appears to have continued through April and possibly into July.
