The ADP National Employment Report provides the strongest clue yet for the pending disastrous BLS jobs report on Friday.
Private sector employment decreased by 20,236,000 jobs from March to April according to the April ADP National Employment Report®. The report utilizes data through the 12th of the month. The NER uses the same time period the Bureau of Labor and Statistics uses for their survey. As such, the April NER does not reflect the full impact of COVID-19 on the overall employment situation.
Unprecedented Job Losses
“Job losses of this scale are unprecedented. The total number of job losses for the month of April alone was more than double the total jobs lost during the Great Recession,” said Ahu Yildirmaz, co-head of the ADP Research Institute. “Additionally, it is important to note that the report is based on the total number of payroll records for employees who were active on a company’s payroll through the 12th of the month. This is the same time period the Bureau of Labor and Statistics uses for their survey.”
Job Losses by Company Size
Job Losses By Sector
Initial Unemployment Claims
In the last 6 week there have been 30 million initial unemployment claims.
20 Years of Employment Gains Have Vanished
Based on the 30 million claims, I commented 20 Years of Employment Gains Have Vanished.
If we assume only 20 million jobs were lost, that would roughly takes us back fo January 2000 or so.
But those are "Private Jobs". They are a subset of "All Employees Total Nonfarm" which in turn is a subset of "Employment Level".
Yesterday, the Chicago Fed addressed the question Is the Unemployment Rate a Good Measure of People Currently Out of Work?
The Chicago Fed projected a baseline unemployment rate of 9.4% with a U-6 rate of 18.9% and a COV-Underutilization Rate of 29%. The Cov rate is essentially the U-6 rate except that it makes additions for Cov-impacted workers.
Recall that if people did not look for work, they are not unemployed. But furloughed people (temporary layoffs), don't have to look.
Upcoming Jobs Report: What Will the Unemployment Rate Be?
On April 30, and based on the 30 million claims, I asked Upcoming Jobs Report: What Will the Unemployment Rate Be?
Here is my formula
Unemployment Rate = (New Claims + Existing Unemployed + Estimate of Claims to Come) / Labor Force
But I also allowed for overcounts, that is people who made an unemployment claim but will not be considered by the BLS as unemployed. Recall that if you worked as little as 1 hour, you are considered "employed".
Furthermore, I made the assumption that there were no new claims coming, making the formula: Unemployment Rate = (New Claims + Existing Unemployed - Estimate of overcounts) / Labor Force
Assume a "Net" Overcount of 8 Million
30.303 million New Claims + 7.140 million Existing Unemployed - 8.000 million Overcounts / 162.913 Labor Force = 18.1%
Assume a "Net" Undercount of 2 Million
30.303 million + 7.140 million + 2.000 million / 162.913 = 24.2%
To pick a specific number, I will go with 21% assuming a net overcount of 4.0 million vs the Household Survey (yielding 20.5%) + another 0.5 percentage points representing a change in the Labor Force.
Mish vs Chicago Fed vs Bloomberg
My Unemployment rate projection is 21% vs the Chicago Fed baseline of 9.4%
For comparison purposes, Bloomberg estimated 20%.
For details and BLS caveats, please see 20 Years of Employment Gains Have Vanished.