Private data takes the stage during shutdown blackout

This morning, payroll processing company ADP reported that the US lost 32,000 private-sector jobs in September, the biggest loss since 2023 and far below estimates. ADP said the headline number was likely exaggerated due to a methodology adjustment, but still emphasized that the employment situation in the US was indeed slowing down significantly.

Wait a sec…the ADP jobs report? Isn’t that the practice squad compared to the government’s jobs report coming out Friday?

It’s true: The ADP report is not something Brew Markets typically spends much real estate on. The monthly report from the Bureau of Labor Statistics (BLS) is viewed as providing a more comprehensive snapshot of the jobs picture than ADP, since it surveys more employers and includes government workers, which ADP does not.

But because of the government shutdown, private data like ADP’s might be the only game in town. Business leaders, policymakers, central bankers, and newsletter writers are staring down an economic data vacuum as the shutdown delays key reports from government agencies, like the BLS, which told Barron’s it will “suspend data collection, processing, and dissemination” should a shutdown happen. That means no jobs report this Friday and possibly no consumer price index report on Oct. 15, depriving the Fed of a crucial inflation reading two weeks before its next interest rate decision.

So can private data fill the void? The ADP’s monthly jobs report has been taken more seriously after revisions in 2022 made it more independent from the BLS report that comes two days later.

However, many economists say third-party reports won’t be a 1:1 replacement to far more substantial government data collection. Chief Economist for UBS Global Wealth Management Paul Donovan wrote in a research note: “Private sector data is a poor substitute. Private data is like viewing the economy through a keyhole—clear, but with a narrow field of vision. Official data is like opening the door.”

Bottom line: It’s about to get real foggy out there at a crucial juncture for the economy.—NF