Two-Way Street

Playing the Hook in the Job Report Game

If you know a number is going to be wrong, why report it at all? That's a question central to labor coverage these days.

If you have more than a passing interest in the economic and labor picture, you know the Big Kahuna numbers everyone concentrates on are tomorrow's payroll growth and unemployment rate tally from the federal government.

You also probably know that everyone tries to guess what it will be. As part of that exercise, a lot of other data tallies get bandied about, like that of Automatic Data Processing. That outfit processes payrolls for roughly 430,000 businesses. That should be a statistically significant enough sample to be a good indicator of what the government's overall number will be.

But it's not ... at least it hasn't been for the last six months or so. Nomura Securities estimates the ADP number has been on average about 94,000 more negative than the government number. There may be a variety of reasons for that ... the numbers count different segments, are subject to different revisions ... heck it could be the government number, not the ADP number, is wrong. Whatever, let the economists duke it out.

Let's look at it this way. Plenty of golfers know they typically hook fifty yards or so on a drive off the tee. And so they compensate by aiming for a spot fifty yards off the pin. So you know ADP is off to the negative ... 84,000 this time around. As a result you can probably predict the payroll pin is more to the upside, like a lot of econo-pronosticators are saying?

That makes the number worth reporting.