The relatively volatile household survey employment series and the Philadelphia Fed’s estimated preliminary benchmark adjusted series suggest flat employment in Q2 (although NOT in H1); see graphs in this post. The ADP release on private nonfarm payroll (NFP) employment today suggests otherwise when taking into account the relatively small change in government employment over the relevant period.

(Click on image to enlarge)

Figure 1: Cumulative change in private nonfarm payroll employment relative to 2021M12, from BLS (blue), Bloomberg consensus of 1/5 (blue +), ADP (purple), and QCEW private covered employment, seasonally adjusted by author using X-13 (orange), all in 000’s, s.a. Arrows/numbers denote change between 2022M03 to 2022M06, in 000’s. A hypothesized 2022H1 recession peak-to-trough recession period shaded lilac. Source: BLS, ADP via FRED, Bloomberg, BLS and author’s calculations.

Note that ADP indicates 1.2 million net new private employment, vs. 1 million, for the period between March and June — rather than essentially zero as indicated for total nonfarm payroll employment (over this period, BLS indicates only 55 thousand net new government jobs, so change in private NFP translates pretty much to total NFP). QCEW private employment also rises 1.5 million, although the result depends on seasonal adjustment method; using geometric moving average, the increase is 98 thousand.

Since ADP uses a completely different sample and is not calibrated to match the BLS establishment series (in its revampled methodoloy), I find it likely that private NFP probably did increase substantially in Q2.

So is this a question of seasonal adjustment? Here’s the corresponding graph for not seasonally adjusted data.

(Click on image to enlarge)

Figure 2: Cumulative change in private nonfarm payroll employment relative to 2021M12, from BLS (blue), ADP (purple), and QCEW private covered employment (orange), all in 000’s, s.a. Arrows/numbers denote change between 2022M03 to 2022M06, in 000’s. A hypothesized 2022H1 recession peak-to-trough recession period shaded lilac. Source: BLS, ADP via FRED, BLS and author’s calculations.

The QCEW change of 2.5 million is indeed less than the BLS establishment survey series of 3.1 million; but it’s a difference of 600K, not over a million.

So, bottom line:

• In 2022H1, employment rose.
• In 2022Q2, private nonfarm payroll employment likely rose.

And I (still) doubt a recession will be called for 2022H1.

More By This Author: