The ADP National Employment Report provides a monthly snapshot of U.S. nonfarm private sector employment based on actual transactional payroll data.
It is also popularly known as the ADP Jobs Report or ADP Employment Report.
The report is sponsored by Automatic Data Processing Inc., the firm that has prepared the report since 2006, and handles payroll for about a fifth of U.S. private employment.
The ADP National Employment Report is viewed as a useful preview of the more widely followed Employment Situation report by the Bureau of Labor Statistics.
What is the ADP National Employment Report?
The ADP National Employment Report is an independent estimate of the change in U.S. nonfarm, private employment derived from actual, anonymous payroll data of client companies served by ADP,
The report details the current month’s total private employment change, weekly job data, and wage insights from the previous month.
The ADP National Employment Report is released to the public each month, free of charge, to provide insights into the U.S. labor market and provide businesses and governments with a source of credible and valuable information.
The following payroll-based employment information is provided:
- Total U.S. private employment
- Employment for U.S. goods industries ( manufacturing, mining, and construction)
- Employment for U.S. service industries
- Employment for small (1-49 employees), medium (50-500 employees), and large (500+ employees)
Why is the ADP National Employment Report important?
If you’re employed by a non-government company, there’s a possibility that your paycheck is processed by Automatic Data Processing Inc. (ADP).
The company handles payroll for about a fifth of U.S. private employment, putting it in a unique position to survey trends in the nation’s labor market.
Traders often consider the ADP report as the prelude to the BLS release of NFP because of the existent correlation between the two. The overlaying of both series below should speak for itself.
Another reason that forex traders follow this report is the same as with the Employment Situation report.
Solid growth in employment figures increases inflationary pressures which increase the likelihood that the Federal Reserve will raise interest rates.
What’s the difference between the ADP National Employment Report and the NFP report?
The ADP National Employment Report presents an independent measure of the U.S. labor market rather than a forecast of the Bureau of Labor Statistics (BLS) monthly non-farm payrolls (NFP) report.
The ADP National Employment Report claims to provide “high-frequency measures of employment, including jobs and wages, to provide a clearer, near real-time assessment of the labor market.”
ADP’s anonymized person-level payroll data based on 25 million workers aims to provide a more representative picture of the U.S. labor market and is meant to complement official government data.
The two reports capture the labor market from different angles.
For example, in the BLS survey, a person is counted as employed if they received pay during the week which includes the 12th day of the month. The ADP report asks how many people were actually on the company’s payroll during that month.
Aside from being an independent measure of U.S. employment data that’s meant to complement government data, here’s how ADP’s report differs:
- Government employees are excluded.
- Since data is based on payroll, this means some workers such as the self-employed aren’t counted.
- Not as detailed as the BLS Employment Situation report.
How to read the ADP National Employment Report?
Traders will be concerned with what the report means for the economy in the near future.
A strong report indicates a lot of hiring in the private sector.
If more people are working, household income rises and that fosters more consumer spending.
When currency traders look at this report, they try to determine what impact the data will have on economic growth forecasts, inflation forecasts, and if changes to these forecasts will force the Federal Reserve to make any changes in interest rates.
Fed officials constantly monitor data watching for signs of potential inflationary pressures
For example, stronger job growth means fewer unemployed workers, which means workers can potentially demand higher wages.
Rising wages increase disposable income, which raises the demand for goods and services, which causes prices to rise (inflation).
If the market thinks that the report is supportive of an interest rate hike(s) by the Fed, then would be bullish for the U.S. dollar.
If the market thinks that the report is supportive of an interest rate cut(s) by the Fed, then this would be bearish for the U.S. dollar.
Job growth of less than 100,000 a month suggests a weakening economy.
By tracking jobs, you can get a sense of the degree of tightness in the job market. If inflation threatens, it’s a good bet that interest rates will rise; while bond and stock prices will fall.
Where to find the ADP National Employment Report?
Published monthly, two days before the Bureau of Labor Statistics puts out the NFP, the data can be seen on BabyPips.com’s economic calendar
Previous months’ data, consensus, and actual releases are available.
What time is it released?
The ADP National Employment Report is published monthly by the ADP Research Institute in collaboration with the Stanford Digital Economy Lab.
The ADP National Employment Report s is released on the first Wednesday of every month, at 8.15 am ET.
