ADP employment report preview

ADP employment data to be released at 12:15 GMT is today’s 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 Nonfarm payroll data.

Previous performance –

• Non-farm private sector employment grew at 298,000 in February. In January payroll grew by 246,000.
• Small business sector hiring at 104,000.
• Employment in franchise increased by 17,100.
• 32,000 jobs added in the manufacturing sector.
• 106,000 jobs were added in the goods-producing sector.
• Construction sector added 66,000 jobs.
• 4,000 jobs were added in financial activities.
• Services sector remains the major job provider. Payroll added 193,000 people in February.

Expectation Today –

• The headline number is expected to decline to 187,000 as per median estimate.

Market Impact –

• Any gain above 230,000 will be considered to be very good and the US stock market would rise further on risk-affinity.

• Data below 150,000 likely to give rise to concerns regarding US economic prowess and doubts would emerge on manufacturing revival under Trump.

However, since several FOMC members indicated a willingness to hike twice more this year, a weaker jobs report is likely to weigh more on the equities than on the dollar. The dollar index is currently trading at 100.49, flat for the day.