The ADP payroll company releases a report in advance of the official US governmental job reports that provides a quick glance at the state of the unemployment rate and job market in the country. This report does not include many factors that drive the overall economy, and its reliance on jobs as a focus is due to the nature of ADP as a private payroll provider. The report gives a solid indication of job growth and which markets are currently seeing the greatest amount of growth, but it may be of limited use to manufacturers.
A recent ADP report showed that 200,000 jobs were added in the private sector during July 2013. This growth of 200,000 jobs seems to indicate a healthy economy and decent rebound in the overall employment rate. The report also indicated an increase in the number of jobs added in June 2013. The adjustment for June brings the employment rate closer to the governmental figure of 195,000 for the same month. The original number was only 188,000, which was a marked departure from the governmental numbers.
Manufacturing experts interested in the economy may find the ADP numbers less than encouraging as it frequently reflects primarily on gains in the retail and hospitality markets, such as in the July report. This means that the ADP report itself may not be the best method of gauging whether or not a healthy economy exists in a specific market sector. Also, previous errors in accounting and data collection by the ADP make its results questionable, and its reliance on private industry reports eliminates work done for governmental organizations.
The ADP payroll company's monthly report provides an excellent snapshot of the economy, but its limited size and scope, as well as the unverified methods used to collect data, make it a potentially unreliable estimate of how the official figures will turn out. The average difference between these two reports often comes in at around 42,000 jobs, making it difficult to determine from just one report how the economy is actually faring.
Manufacturing experts and investors should take precautions to ensure they have the most accurate information available before making important buying or staffing decisions. Overall market information can be gleaned or extrapolated from the first report released, but the combination of the ADP and official governmental reports each month is likely a much more effective indicator of the state of the economy. Savvy manufacturers looking to determine potential consumer needs and overall market conditions based on jobs figures should strive to get as much information as possible and make decisions based on both private and governmental figures. Reading the two reports is a better way to judge the economy than just relying on the ADP report.
(Photo courtesy of jannoon028 / freedigitalphotos.net)
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