Wednesday, March 31, 2010

Employment report probably understates unemployment

By Mark Thoma | Mar 31, 2010

The ADP released a report today showing that private employment in the US fell by 23,000 in March. I do not pay a lot of attention to this report due to concerns over its accuracy, but it does open up the discussion of what to expect when the BLS Employment Report is released on Friday.

There are two things to be wary of when interpreting Friday’s report. First, hiring for the census will push employment numbers up, but these jobs are temporary so this will make the underlying trend for employment look better than it actually is. Second, the March numbers could also be affected by a rebound from the snowstorms in February, and this too could make the numbers look better than the actual underlying permanent trend.

The ADP numbers do not contain census jobs — these are estimates for the private sector only — and there is no adjustment for the snowstorms, so the 23,000 loss reported today could have been even larger without the rebound from the storms.

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