Comments on: Redux: Household versus Establishment Surveys http://www.ritholtz.com/blog/2006/07/redux-household-versus-establishment-surveys/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 23:06:20 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: szara http://www.ritholtz.com/blog/2006/07/redux-household-versus-establishment-surveys/comment-page-1/#comment-18547 szara Tue, 11 Jul 2006 04:07:14 +0000 http://thebigpicture.dev.wilder.ca/blog/?p=3065#comment-18547 It's kind of ill informed to describe the BLS NFP survey as a bunch of people with clipboards. Every employer that provides unemployment insurance (ie damn near everybody) has to provide them with a monthly employee count. They draw an enormous sample from these records to do the NFP data. People gripe about the birth/death adjustments, but they seem to do a credible job, and they tinker with it every year to fine tune it. With several months lag, they also publish the 100% count, so you can check their how close their initial estimates were. It's really hard to find a more solid economic data source. The initial release is preliminary, though, and is often revised substantially. On the other hand, people shouldn't be so quick to bash Macroeconomic Advisors, the firm that puts the ADP data together. It's former Fed governer Laurence Meyer's firm. He has a long standing reputation as an excellent data cruncher and forecaster. I don't know how active a role he plays in the firm now, though. My guess is that the "true" payroll growth was close to the 155k consensus, and that next month's revision of the BLS data will show that. It’s kind of ill informed to describe the BLS NFP survey as a bunch of people with clipboards. Every employer that provides unemployment insurance (ie damn near everybody) has to provide them with a monthly employee count. They draw an enormous sample from these records to do the NFP data. People gripe about the birth/death adjustments, but they seem to do a credible job, and they tinker with it every year to fine tune it. With several months lag, they also publish the 100% count, so you can check their how close their initial estimates were. It’s really hard to find a more solid economic data source. The initial release is preliminary, though, and is often revised substantially.

On the other hand, people shouldn’t be so quick to bash Macroeconomic Advisors, the firm that puts the ADP data together. It’s former Fed governer Laurence Meyer’s firm. He has a long standing reputation as an excellent data cruncher and forecaster. I don’t know how active a role he plays in the firm now, though.

My guess is that the “true” payroll growth was close to the 155k consensus, and that next month’s revision of the BLS data will show that.

]]> By: whipsaw http://www.ritholtz.com/blog/2006/07/redux-household-versus-establishment-surveys/comment-page-1/#comment-18546 whipsaw Tue, 11 Jul 2006 03:22:45 +0000 http://thebigpicture.dev.wilder.ca/blog/?p=3065#comment-18546 "Over the 69 months in which the index is available, from 2001 to May 2006, the standard error relative to the "as was reported" BLS preliminary estimate (for private nonfarm employment) is 91 thousand......." 91000? That isn't 'standard error' that's Wild Ass Guess. Somebody is grossly wrong and I'll go with Barry on this- ADP needs to quit putting out the puff jobs. “Over the 69 months in which the index is available, from 2001 to May 2006, the standard error relative to the “as was reported” BLS preliminary estimate (for private nonfarm employment) is 91 thousand…….”

91000? That isn’t ‘standard error’ that’s Wild Ass Guess. Somebody is grossly wrong and I’ll go with Barry on this- ADP needs to quit putting out the puff jobs.

]]> By: A Dash of Insight http://www.ritholtz.com/blog/2006/07/redux-household-versus-establishment-surveys/comment-page-1/#comment-18549 A Dash of Insight Mon, 10 Jul 2006 17:29:46 +0000 http://thebigpicture.dev.wilder.ca/blog/?p=3065#comment-18549 <strong>Redux: Household versus Establishment</strong> While Barry Ritholtz's blog is a big favorite for lots of us, I do not think that David Malpass, Chief Global Eocnomist for Bear Stearns, is going to drop by to comment on the employment numbers. His work in the Redux: Household versus Establishment

While Barry Ritholtz’s blog is a big favorite for lots of us, I do not think that David Malpass, Chief Global Eocnomist for Bear Stearns, is going to drop by to comment on the employment numbers. His work in the

]]> By: JoshK http://www.ritholtz.com/blog/2006/07/redux-household-versus-establishment-surveys/comment-page-1/#comment-18545 JoshK Mon, 10 Jul 2006 16:40:57 +0000 http://thebigpicture.dev.wilder.ca/blog/?p=3065#comment-18545 JRG, Thanks. This just sounds abusrd, I'm going to bet on ADP, too. -J JRG,

Thanks. This just sounds abusrd, I’m going to bet on ADP, too.

-J

]]> By: jrg http://www.ritholtz.com/blog/2006/07/redux-household-versus-establishment-surveys/comment-page-1/#comment-18544 jrg Mon, 10 Jul 2006 14:33:56 +0000 http://thebigpicture.dev.wilder.ca/blog/?p=3065#comment-18544 more excerpts: "Total employment in nonfarm establishments from the CES or payroll survey is not directly comparable with the Bureau's estimates of the number of persons employed in nonagricultural industries obtained from the monthly household survey. (See chapter 1 for a description of the Current Population Survey, or household survey.) The two surveys have differences in concept and scope and employ different collection and estimating techniques." and "All firms with 250 employees or more are asked to participate in the survey, as well as a sample of smaller firms. Together, they comprise the largest monthly employer survey in existence, with a sample of over 350,000 establishments. Despite the voluntary nature of the survey, numerous establishments have reported regularly for many years." http://www.bls.gov/sae/790meth.htm (you really must read all about their 'methodology'...... the more I've read, the more I believe the ADP numbers are more accurate over-all) more excerpts:
“Total employment in nonfarm establishments from the CES or payroll survey is not directly comparable with the Bureau’s estimates of the number of persons employed in nonagricultural industries obtained from the monthly household survey. (See chapter 1 for a description of the Current Population Survey, or household survey.) The two surveys have differences in concept and scope and employ different collection and estimating techniques.”
and
“All firms with 250 employees or more are asked to participate in the survey, as well as a sample of smaller firms. Together, they comprise the largest monthly employer survey in existence, with a sample of over 350,000 establishments. Despite the voluntary nature of the survey, numerous establishments have reported regularly for many years.”

http://www.bls.gov/sae/790meth.htm

(you really must read all about their ‘methodology’…… the more I’ve read, the more I believe the ADP numbers are more accurate over-all)

]]> By: jrg http://www.ritholtz.com/blog/2006/07/redux-household-versus-establishment-surveys/comment-page-1/#comment-18543 jrg Mon, 10 Jul 2006 14:17:26 +0000 http://thebigpicture.dev.wilder.ca/blog/?p=3065#comment-18543 JoshK check this site out: http://www.bls.gov/sae/790meth.htm Here is a some of the 'scary' part: "BLS cooperates with State employment security agencies in the Current Employment Statistics (CES) survey to collect data each month on employment, hours, and earnings from a sample of nonfarm establishments (including government). " I'm still reading...... JoshK
check this site out:
http://www.bls.gov/sae/790meth.htm

Here is a some of the ‘scary’ part:
“BLS cooperates with State employment security agencies in the Current Employment Statistics (CES) survey to collect data each month on employment, hours, and earnings from a sample of nonfarm establishments (including government). ”
I’m still reading……

]]> By: JoshK http://www.ritholtz.com/blog/2006/07/redux-household-versus-establishment-surveys/comment-page-1/#comment-18542 JoshK Mon, 10 Jul 2006 13:30:10 +0000 http://thebigpicture.dev.wilder.ca/blog/?p=3065#comment-18542 Does anyone know the collection methodology for the BLS #'s? My gut is to trust ADP #'s b/c they come out of their payroll system and I suspect that the BLS #'s have a large dependency on people with phones and clipboards. But maybe someone here knows more? Does anyone know the collection methodology for the BLS #’s? My gut is to trust ADP #’s b/c they come out of their payroll system and I suspect that the BLS #’s have a large dependency on people with phones and clipboards. But maybe someone here knows more?

]]> By: dloberk http://www.ritholtz.com/blog/2006/07/redux-household-versus-establishment-surveys/comment-page-1/#comment-18541 dloberk Mon, 10 Jul 2006 07:16:05 +0000 http://thebigpicture.dev.wilder.ca/blog/?p=3065#comment-18541 A good analysis of this from an economist at Northern Trust who understands it correctly states in referring to the Establishment Survey "there is a steady deceleration of hiring in place" and concludes that "the June employment report clearly indicates that hiring has slowed significantly in the U.S. economy. The weak tone of this report offers “cover” for the FOMC to pause, assuming that the July employment report, to be published on August 4 (prior to the August 8 FOMC), does not have payrolls increasing in the range forecast by ADP/Macroeconomic Advisors for today’s June report." Link to analysis: http://www.northerntrust.com/pws/jsp/display2.jsp?XML=pages/nt/0601/1138283678319_6.xml&TYPE=interior A good analysis of this from an economist at Northern Trust who understands it correctly states in referring to the Establishment Survey “there is a steady deceleration of hiring in place” and concludes that “the June employment report clearly indicates that hiring has slowed significantly in the U.S. economy. The weak tone of this report offers “cover” for the FOMC to pause, assuming that the July employment report, to be published on August 4 (prior to the August 8 FOMC), does not have payrolls increasing in the range forecast by ADP/Macroeconomic Advisors for today’s June report.”

Link to analysis: http://www.northerntrust.com/pws/jsp/display2.jsp?XML=pages/nt/0601/1138283678319_6.xml&TYPE=interior

]]> By: JRG http://www.ritholtz.com/blog/2006/07/redux-household-versus-establishment-surveys/comment-page-1/#comment-18540 JRG Mon, 10 Jul 2006 03:50:04 +0000 http://thebigpicture.dev.wilder.ca/blog/?p=3065#comment-18540 I just accidentally bumped into this link and info: "The ADP National Employment Report for June, reported yesterday, was correctly calculated. There is no truth to rumors that the ADP National Employment Report released yesterday, signaling a June increase of 368 thousand in private nonfarm payrolls, was erroneously calculated. Macroeconomic Advisers stands behind the calculations. Over the 69 months in which the index is available, from 2001 to May 2006, the standard error relative to the "as was reported" BLS preliminary estimate (for private nonfarm employment) is 91 thousand......." http://www.macroadvisers.com/csx3/csxPage.asp?APPNAME=Macroecon&LABEL=CSXGETPAGE&CLASS=Macroecon.pclsMain&METHOD=pageMain [Meyer's MPI Laurence H. Meyer's Monetary Policy Insights analyzes the strategic link between the US economic outlook and the policy actions of the Federal Reserve. MPI clients benefit from timely web-based briefings and direct personal attention from Dr. Meyer, an award-winning forecaster and former member of the Federal Reserve Board of Governors] Barry - do you know much about these guys? I just accidentally bumped into this link and info:
“The ADP National Employment Report for June, reported yesterday, was correctly calculated. There is no truth to rumors that the ADP National Employment Report released yesterday, signaling a June increase of 368 thousand in private nonfarm payrolls, was erroneously calculated. Macroeconomic Advisers stands behind the calculations. Over the 69 months in which the index is available, from 2001 to May 2006, the standard error relative to the “as was reported” BLS preliminary estimate (for private nonfarm employment) is 91 thousand…….”
http://www.macroadvisers.com/csx3/csxPage.asp?APPNAME=Macroecon&LABEL=CSXGETPAGE&CLASS=Macroecon.pclsMain&METHOD=pageMain

[Meyer's MPI

Laurence H. Meyer's Monetary Policy Insights analyzes the strategic link between the US economic outlook and the policy actions of the Federal Reserve. MPI clients benefit from timely web-based briefings and direct personal attention from Dr. Meyer, an award-winning forecaster and former member of the Federal Reserve Board of Governors]

Barry – do you know much about these guys?

]]> By: cm http://www.ritholtz.com/blog/2006/07/redux-household-versus-establishment-surveys/comment-page-1/#comment-18539 cm Mon, 10 Jul 2006 00:36:16 +0000 http://thebigpicture.dev.wilder.ca/blog/?p=3065#comment-18539 Brian: I don't know how exactly those filters work, but I can honestly not imagine any method other than looking for keyword and keyword combinations (and, importantly, *rejecting* certain keywords) to select from a large pool of resumes without any other information. So, at an abstract level, you have to use the right keywords in your text, and the problem is that you don't know what the "other side" is looking for. (Assuming a level of honest trying on the latter.) I looked for a job in the US at a time when they were desperate for any warm body, and that certainly helped. I got few, but exclusively relevant calls (I wanted to change industry, my "relevant experience" was an RA job in grad school, and my more extensive industrial experience was only very generally applicable). I went to exactly one interview, and they made sure to let me know right on the spot I will get an offer. I'm not sure that today I would be considered at my experience profile I had back then (note, not "level", but "profile"). And there is nothing malicious about the filtering -- nobody can reasonably review thousands of candidates. But there is no excuse for not selecting whichever 10 out of the thousands every week, after all, they are "looking for people". Brian: I don’t know how exactly those filters work, but I can honestly not imagine any method other than looking for keyword and keyword combinations (and, importantly, *rejecting* certain keywords) to select from a large pool of resumes without any other information.

So, at an abstract level, you have to use the right keywords in your text, and the problem is that you don’t know what the “other side” is looking for. (Assuming a level of honest trying on the latter.)

I looked for a job in the US at a time when they were desperate for any warm body, and that certainly helped. I got few, but exclusively relevant calls (I wanted to change industry, my “relevant experience” was an RA job in grad school, and my more extensive industrial experience was only very generally applicable). I went to exactly one interview, and they made sure to let me know right on the spot I will get an offer. I’m not sure that today I would be considered at my experience profile I had back then (note, not “level”, but “profile”).

And there is nothing malicious about the filtering — nobody can reasonably review thousands of candidates. But there is no excuse for not selecting whichever 10 out of the thousands every week, after all, they are “looking for people”.

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