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New ADP Count Slashes Job Creation for September

Revisions to the way payroll data firm ADP counts private sector job creation have resulted in a sharp drop in the September employment count.

ADP's new calculations put the monthly job creation at just 88,200, down from the 162,000 the firm originally reported earlier this month.

The firm recently has entered into a partnership with Moody's Analytics that will change the way the private payroll count is calculated.

The new private payroll count now is actually under Labor's September job creation household survey net total of 114,000, 104,000 of which came from the private sector.

The unemployment rate dropped last month to 7.8 percent. Separately, as the government's establishment survey said the total number of new private-sector workers swelled by 873,000. (Read More: Consumer Prices Rise on Energy Surge; No Pay Gains)

Economists expect Friday's report to show 125,000 new jobs and the jobless rate to hold steady.

When the Labor Department revealed its September job count, it sparked criticism from some quarters that the numbers were being manipulated for political purposes as the November presidential election drew near.

The soft ADP count could add credence to those who believe the pace of job creation is slower than the government's numbers indicate.

"It's huge, no doubt about it," said Todd Schoenberger, managing principal at the BlackBay Group in New York. "Their changing the methodology tells me that if the number is cut in half with that revision, then the revision we're going to see Friday is going to be a disaster."

Moody's economist Mark Zandi did not return a request for comment.

Former General Electric CEO Jack Welch caused a skirmish after the September jobs report was released when he said on Twitter, "Unbelievable jobs numbers...these Chicago guys will do anything...can't debate so change numbers." (Read More: Jack Welch Defends His Jobs Report Comments (Again))

ADP will announce its October count on Thursday, with the Labor Department to follow on Friday.

ADP usually releases its report on the Wednesday preceding the first Friday of the month, but held off because of damage from Hurricane Sandy. The firm is expected to announce a further revision to the September count along with its October totals. (Read More: Damage From Sandy? What About Potential Economic Boost?)

In announcing the partnership Oct. 24, the two firms said the partnership will help align the private sector job count with the Labor numbers.

At the same time, the new reports will provide a more detailed breakdown of the numbers while expanding the total of businesses that participate.

ADP occasionally has come under criticism for releasing data that is often widely disparate with the government's final count.

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