ADP Employment Change: Impact on NFP Report

2024-10-03 | ADP Employment Change , NFP , Non-Farm Payroll

The ADP Employment Change and the Non-Farm Payroll (NFP) report are two key indicators of the U.S. labour market. While both track employment, they differ in scope and timing, often leading to different results. Here’s a simplified look at what each report means and how ADP data can influence expectations for the NFP release. 

What is ADP Employment Change? 

The ADP Employment Report, released monthly, estimates private-sector job growth using payroll data from about 400,000 U.S. businesses. It provides a snapshot of employment trends, including jobs by business size and industry. It is released two days before the NFP report, making it a valuable early indicator, but not a perfect predictor, as it excludes government jobs. 

What is the NFP Report? 

The NFP Report, published by the Bureau of Labour Statistics, tracks employment in both private and public sectors, offering a more comprehensive view of the labor market. Along with job growth, the NFP includes data on the unemployment rate and wage growth. The Federal Reserve closely watches NFP data to guide decisions on interest rates. 

How ADP Affects NFP Expectations 

Since the ADP report is released before the NFP, it often shapes market expectations. A strong ADP report may lead to optimism about the NFP, boosting stock prices and bond yields. Conversely, weak ADP data could lower expectations for NFP and impact markets negatively. However, because ADP and NFP use different methods, their numbers don’t always match. 

Conclusion 

While the ADP report offers a preview of private-sector job trends, the NFP report provides a fuller picture of the labour market. Understanding both helps investors and policymakers gauge economic health and predict potential market movements. However, it’s essential to view the ADP report as just one part of the bigger employment picture. 

Market CommentaryIconBrandElement

article-thumbnail

2025-02-17 | Market Commentary

Market on Edge as Falling Yields Fuel Rate Cut Speculation

Markets rally as bond yields decline, fueling speculation of upcoming Federal Reserve rate cuts. Will the Fed ease policy soon?

article-thumbnail

2025-02-10 | Market Commentary

Stock Market Dips as Strong Jobs Data Delays Fed Rate Cuts

US stock market drops as strong jobs data dashes hopes for immediate Fed rate cuts. Rising Treasury yields and trade war concerns add to market volatility

article-thumbnail

2025-02-03 | Market Commentary

Market Rattled as New Tariff Threats and AI Disrupt Rally

Market tumbled as Trump announced tariffs on China, Mexico, and Canada, sparking volatility. Investors brace for uncertainty amid trade tensions and AI shifts