Put it on CNN and it’s “true.” Americans will turn on their tv’s and open their newspapers tomorrow (the small percentage that still read newspapers) to hear and read that the U.S. economy “created” nearly 300,000 jobs in February – at least according to ADP. .
The easiest way to hold ADP accountable and eviscerate the credibility of their report is to examine their “methodology.” Of course, this requires searching the ADP website to find the area way at the bottom where it describes its “methodology,” something no fake news reporter or analyst has to time with which to bother.
As ADP describes in its “methodology” section, it seeks to “closely align” the final output of its calculations with that of the “final print of the U.S. Bureau of Labor Statistics (BLS) numbers.” Thus, ADP’s “job creation” report is really nothing more than a regurgitation of the fraudulent employment report issued by the U.S. Government.
Here’s the other variables of input that the new ADP methodology now incorporates into its methodology used in ADP’s “enhanced ADP National Employment Report”
- ADP matched-pair growth rates by industry
- Lagged values of BLS estimates of growth of employment by industry with industry specific restrictions
- Unemployment Insurance Claims (UNI_US)
- Oil Prices
- The Michigan Consumer Sentiment Index (CSENT_US)
- The Composite Index of Leading Indicators (LEAD_US)
The “soft” data reports above have nothing do with job creation. Unemployment claims are historically low because the labor force participation rate is historically low, which means that the number of people who are terminated and can file for nemployment benefits is historically low. How is this variable an input on job creation?
WELCOME TO ADP’S RABBIT HOLE
Since when did the manipulated price direction of oil create jobs? Consumer confidence creates jobs? Please. In fact, ALL of the variables listed above and used by ADP in formulating its job creation report are highly manipulated and in no way represent the process by which jobs are created – other than the growth in propaganda creation positions at the Government and at the mainstream media outlets.
But there’s more. ADP claims that 106,000 jobs were created in February in the “goods producing sector.” The primary goods producing sector in the U.S. is the auto industry, which is currently cutting jobs in order to cut production in the face of record auto inventory sitting on dealer lots. In fact, GM announced 1,100 job cuts at one of its production facilities yesterday.
ADP also claims that 66,000 jobs were “created” in construction. But we know based on the Government’s construction spending report that the Government alone cut construction spending by nearly 8% last month. Most major cities around the U.S. now have years of apartment inventory. For instance, San Francisco now has 5 years of vacant supply: LINK. Commercial real estate occupancy rates are soaring with the number of retailers filing bankruptcy and closing stores. At least 7 major retailers this year have filed chapter 11 or are in the process of trying to restructure debt. This is a major source of job loss and it’s simply not credible that commercial construction is on the rise, which means that the 66,000 “new” jobs attributed to construction is a complete fraud.
Leisure and hospitality is credited with producing 40,000 new jobs in February. I’d love to sit down with the ADP analyst to find out where this number came from. The restaurant industry experienced revenue declines nearly every month in 2016. Same-store-sales and foot traffic plunged across the industry. It’s inconceivable that the leisure and hospitality industry produced this many jobs, if any at all, given the underlying fundamental condition of the median average household, which has been experiencing declining real disposable income for several years now
The report also gives credit to small businesses for “creating” 104,000 jobs. This is not even remotely credible. A report out just a couple months ago stated that the creation of new businesses in the U.S. is at a 40-year low: LINK. Does anyone really believe that Trump’s “hopium” effect suddenly inspired a rush to start new businesses which then hired 104,000 people? Why are many unemployed Americans frequently using something like this clean, simple template for their resumes in hopes of standing out within this job market, if these numbers are legitimate?
There’s several more inconsistencies in ADP’s report. I’ll leave it to the reader to sort through the actual report itself and decide what’s real and what’s fraudulent. As far as I can tell, the ADP report has been designed to piggy-back and “confirm” the fraudulent employment issued by the Government every month.
300,000 new hires??!?!
Never go against a statistician when jobs are on the line
More Kranzler Karma revealing the truth! How long until you get this on Zero Hedge and other sites where it deserves even more eyeballs. ADP has always been a freaking joke thanks for exposing there ridiculous methodology.
BTW saw this on Kitco think this will start a trend? Can you imagine anyone thinking their gold in London is safe….how about a repatriation trend wouldn’t that be fun
Dave said: “Most major cities around the U.S. now have years of apartment inventory. For instance, San Francisco now has 5 years of vacant supply: LINK.”
Dave – Mark Hanson just posted a note on his blog yesterday about the vacant housing in major metros around the globe – San Fran and LA – being in his backyard analysis are his focus – it is an interesting read.
Never thought that ADP stats are a fraud.
High regards for their payroll services, used in companies I ve run in several countries, I was under impression they derive their reports from data, anonymous-ed crunching their vast store of info about actual in/out movements from their customers, maybe then extrapolating.
What a put off.
Yes, they take samples – no doubt biased – and then layer in the “soft” economic reports per its methodology and then make sure everything correlates with what has already been reported by the BLS. And ADP is used mainly by mid and large-size companies. Small companies don’t spend money on something like that when there’s desk-top software programs that do it. And yet ADP attributes more than 1/3 of its job creation number to small businesses. No doubt based on the BLS’ “birth/death” bullshit model.
As employment drops, payroll services are less needed, so of course ADP is going to lie…especially when liars aren’t punished. What mystifies me is why ADP is still around at all in an age of automation, but they’re probably on their way out by the looks of their endless re-posting of fake jobs (mining for employer references no doubt).
Keep up the good work Mr. Kranzler. We need to know the truth behind the Government manipulation schemes…
I could not agree anymore with every statement made about ADP in this article for ADP is fraudalent and corrupted in reality.
ADP is a well-known and recognized corporation that many companies use and ADP pays self-tribute to its own perceived qualities and virtues. However, ADP does not deserve its position in the nation since ADP is negligent, misleading, defective and it has caused many issues to countless individuals. There are already cases decided in court against ADP. The goverment should force ADP to become transparent and truthful. ADP should have been indictated at this point.