The U.S. labor market's health is often gauged by two prominent monthly reports: the Automatic Data Processing (ADP) private payrolls and the Bureau of Labor Statistics (BLS) non-farm payrolls. While these reports have historically shown a high degree of correlation, their monthly findings can diverge significantly, presenting a complex picture for analysts and policymakers. This discrepancy, rather than being a flaw, offers a more comprehensive and nuanced perspective on employment trends, especially in an evolving economic landscape.
Understanding the distinct methodologies and interpretations of these reports is crucial for a complete economic assessment. While the ADP report, released ahead of the BLS, offers an early glimpse into private sector employment, it is not designed as a direct predictor of the official government figures. The variations highlight the multifaceted nature of employment data and the benefits of integrating multiple data sources for a robust understanding of the labor market.
Methodological Differences and Data Interpretation
The ADP and BLS employment reports, despite appearing to measure the same thing, often produce conflicting results due to fundamental differences in their data collection and processing. The ADP report, which draws data from 26 million workers across various companies, includes all individuals on payrolls, regardless of whether they received pay during the reference period. This means that factors like strikes or natural disasters, where employees might not be compensated but remain on the company's books, can influence ADP's figures. In contrast, the BLS conducts surveys of approximately 122,000 establishments and only accounts for workers who received payment during a specific reference week. This distinction can lead to noticeable disparities, as seen in instances where one report indicates job losses while the other shows gains. For example, in June 2025, ADP reported a decrease of 33,000 jobs, while the BLS announced a gain of 147,000 jobs.
These methodological variations mean that neither report can be considered a perfect substitute for the other; instead, they offer complementary insights. A 2019 Federal Reserve study suggested that combining the insights from both reports can reduce measurement error by approximately 20%, indicating their individual value in contributing to a more accurate overall picture. Furthermore, the BLS faces a growing challenge with declining survey response rates, which stood at a low 43% in June 2025. This trend underscores the increasing importance of alternative data sources like ADP's payroll information, which can provide valuable context and reinforce the overall understanding of the labor market's dynamics.
The Evolving Role of Diverse Employment Metrics
Initially, significant discrepancies between the ADP and BLS reports often caused market volatility and presented challenges for economic assessments. However, there is a growing consensus among economists that these divergences are not necessarily problematic but rather beneficial. Instead of viewing the ADP report as a direct predictor of the BLS figures, the financial community is increasingly recognizing both reports as independent measures that, when analyzed together, offer a more comprehensive view of the labor market. This shift in perception aligns with ADP's official stance, which explicitly states that its report is not intended to forecast the BLS's monthly jobs report, a policy reinforced after its methodology was retooled in 2022.
Former BLS commissioner Erica Groshen highlighted that these diverse data sources act as "checks on each other," providing a more robust and nuanced understanding of employment trends. In an era characterized by declining survey participation and increasing economic complexities, having multiple, independent measures of job growth becomes a crucial asset. This approach moves beyond the expectation of perfect correlation and instead embraces the idea that each report captures subtly different aspects of the same labor market. By synthesizing insights from both ADP and BLS, analysts and policymakers can develop a richer, more reliable assessment of the U.S. employment landscape, leading to more informed decision-making and a clearer understanding of economic health.