The ADP National Employment Report
The ADP National Employment Report
The ADP National Employment Report measures the monthly change in non-farm, private employment in the United States. It’s based on payroll data from approximately 400,000 U.S. business clients1. The report is released two days before the government’s non-farm payroll report and is considered a good predictor of the Non-farm payroll data.
Significance of the ADP National Employment Report
- 1. Economic Indicator: It provides an early indication of the health of the U.S. labor market. Since it's released two days before the government's official non-farm payroll report, it helps economists and analysts gauge the direction of the job market1.
- 2. Market Impact: The report can influence financial markets. A higher-than-expected increase in employment is generally seen as bullish for the U.S. dollar (USD) and can lead to positive movements in stock markets1. Conversely, a lower-than-expected increase can be bearish for the USD and may cause market volatility.
- 3. Policy Decisions: The Federal Reserve closely watches employment data to make decisions about monetary policy. Strong job growth might prompt the Fed to consider tightening monetary policy to control inflation, while weak job growth might lead to more accommodative measures1.
- 4. Consumer Spending: Employment levels are a leading indicator of consumer spending, which accounts for a significant portion of economic activity. Higher employment typically leads to increased consumer spending, boosting overall economic growth1.
Latest Insights
The latest ADP National Employment Report shows that private employers in the U.S. added 146,000 jobs in November 2024. Here’s a breakdown of the data:
- Service-producing sector: 140,000 jobs
- Goods-producing sector: 6,000 jobs
The report also highlighted that hiring at large employers led the growth, but industry performance was mixed, with manufacturing being the weakest since spring.
Why Traders Care
Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity. The forecast data for the month of December is at 139,000 jobs.
Usual Impact on the Market
The ADP Non-Farm Employment data typically has a notable impact on financial markets. Here’s how it usually affects them:
- 1. U.S. Dollar (USD): A higher-than-expected increase in employment is generally bullish for the USD, as it suggests a strong economy and potential interest rate hikes by the Federal Reserve. Conversely, a lower-than-expected increase can be bearish for the USD1.
- 2. Stock Markets: Positive employment data can boost stock markets, as it indicates economic growth and increased consumer spending. On the other hand, weaker-than-expected data can lead to market declines as investors worry about economic slowdowns1.
- 3. Bond Yields: Strong employment data can lead to higher bond yields, as it suggests a growing economy and potential inflation, prompting investors to demand higher returns on bonds. Conversely, weaker data can lead to lower bond yields as investors seek safer assets1.
- 4. Commodity Prices: Employment data can also impact commodity prices. A strong job market can increase demand for commodities like oil and metals, driving up prices1. Conversely, weaker data can lead to lower commodity prices.
Key Data
- Data: ADP Non-Farm Employment Change
- Issuer: Automatic Data Processing, Inc.
- Latest Data: 146,000 jobs in November 2024
- Expected Data: 139,000 jobs in December 2024
- Date and Time: January 8, 2025, 1:15 PM GMT / 9:15 AM Eastern / 8:15 AM Central
Usual Impact
The more jobs created, the better it is for the economy. USD base pairs shoot up, USD quotes drag, commodities rally, stock markets increase, and emerging markets fall.