ADP employment report preview

ADP employment data to be released at 12:15 GMT, is today’s one of the most vital dockets from the US to be watched by market participants. This report is one of the key data that investors will use to gauge US economic strength.

What is ADP employment?

• The report is a measure of non-farm private sector employment which is obtained by utilizing an anonymous subset of roughly 400,000 U.S. businesses which are clients of ADP.

• This data is a very good measure of employment strength of the economy and a good precursor of upcoming Nonfarm payroll data.

Past performance –

• Non-farm private sector employment grew at 275,000 in April. In March payroll grew by 129,000.
• Small business sector hiring at 77,000 in April.
• Midsized companies added 145,000 jobs.
• Large companies added 53,000 jobs last month.
• 5,000 jobs added in the manufacturing sector.
• 2,000 jobs were lost in the natural resources and mining sector.
• 52,000 jobs were added in the goods-producing sector.
• Construction sector added 49,000 jobs.
• Leisure and hospitality sector added 53,000 jobs.
• 1,000 jobs lost in the information technology sector.
• 54,000 jobs added in Education and Health.
• The services sector remains a major job provider. Payroll added 223,000 people in April.

Expectation Today –

• The headline number is expected at 180,000 as per the median estimate.

Market Impact –

• Any gain above 200,000 will be considered to be very good and the US stock market would rise further on risk-affinity, along with a recovery in the dollar. The dollar index is currently trading at 96.95, down 0.18 percent for the day so far.

• The broader trend for the USD is down for the day and week. So, a materially weak report with gains below 150,000 would accelerate the selloff in USD.