Reuters reported that U.S. private payrolls fell for the first time in a year in January as soaring COVID-19 infections disrupted business operations, raising the risk of a sharp decline in employment that would deal a temporary setback to the labor market.
Now keep in mind that the ADP report counts all active workers as employed regardless of whether they are paid or not during the survey week. In the government report, people who are out sick or in quarantine and do not get paid during the survey period are counted as unemployed in the survey, even if they still have a job with their companies. This means that if there were a pandemic causing large numbers of otherwise employed workers to be out sick, you would expect that the government job numbers would be significantly lower than the ADP number, but that isn’t what happened.
Two days later, just this morning, the US government claimed that there were 467,000 jobs added to the economy in January, even though the unemployment rate increased from 3.9 to 4.0 percent. The government is claiming that the economy is growing at a rate of 6.9% per year.
So which report is to be believed?