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 135,000 in September. In August payroll grew by 237,000.
• Small business sector hiring at -7,000 in September.
• Midsized companies added 63,000 jobs.
• Large companies added 79,000 jobs last month.
• Employment in franchise increased by 14,000.
• 18,000 jobs created in the manufacturing sector.
• 1,000 jobs were added in the natural resources and mining sector.
• 48,000 jobs were added in the goods-producing sector.
• Construction sector added 29,000 jobs.
• Leisure and hospitality sector added 20,000 jobs.
• 4,000 jobs were added in financial activities.
• Services sector remains the major job provider. Payroll added 88,000 people in September.

Expectation Today –

• The headline number is expected to increase to 200,000 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 94.55, up 0.1 percent for the day so far.

• Data below 160,000 likely to give rise to concerns regarding US economic prowess and doubts would emerge on manufacturing revival under Trump. The dollar is likely to suffer but one must note that it is undergoing a correction after the big sell-off.