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.

Past performance –

• Non-farm private sector employment grew at 178,000 in July. In June payroll grew by 158,000.
• Small business sector hiring at 50,000 in July.
• Midsized companies added 83,000 jobs.
• Large companies added 45,000 jobs last month.
• Employment in franchise increased by 26,600.
• 4,000 jobs lost in the manufacturing sector.
• 3,000 jobs were added in the natural resources and mining sector.
• 4,000 jobs were added in goods producing sector.
• The construction sector added 6,000 jobs.
• Leisure and hospitality sector added 15,000 jobs.
• 13,000 jobs were added in financial activities.
• Services sector remains the major job provider. Payroll added 174,000 people in July.

Expectation Today –

• The headline number is expected to increase to 185,000 as per median estimate.

Market Impact –

• Any gain above 220,000 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 92.45, up 0.2 percent for the day so far.

• Data below 150,000 likely to give rise to concerns regarding US economic prowess and doubts would emerge on manufacturing revival under Trump. The dollar index is likely to suffer but one must note that it is undergoing a correction after the big sell off.