ADP employment Preview: Private hiring set to double the historical standards for April

• The ADP is expected to deliver 200K new jobs in April, double the historical average of last 14 years.
• The ADP private employment report is considered a forerunner of government Non-farm payroll report due this Friday, but the data tend to vary.  

The Automated Data Processing (ADP) private employment is expected to rise 200K in April after adding 241K new jobs in March. The ADP is considered the forerunner of the most important US macro release, the US non-farm payroll report that usually set the trend for the US Dollar on the foreign exchange market.

The latest data from the ADP private employment report confirm strong momentum in the US labor market with job creation exceeding the market estimates every month since August last year. Looking at the ADP’s long-term data series, with the ADP report confirming the market expectations of 200K new jobs added in April, compared with 98K representing the 14-year average of new jobs created in April. Looking at the statistical mean, the April ADP headline employment number is 135K for last 14 years. 

For the last two years, the ADP employment data were pretty solid rising 155K in 2017 and 167 in 2016, while in April of 2014 the AFP employment data reached the highest in a sample since 2002 with 321K new jobs added within a month.

Although there is a historically high correlation between the ADP employment report headline number of the new jobs added in the US economy and the government’s labor market report, but the differences in the sample may result in variations. 

The sample of companies that the ADP is using to analyze the labor market in the US includes 411K private US companies employing some 24 million workers and still differentiated with the outcome of government’s report in March. 

While the ADP report surprised on the upside in March rising 241K, the government’s report two days later disappointed on the downside with new jobs rising 103K compared to 188K expected, disregarding the long-term correlation between the two indicators.

The historical correlation of ADP and Labor Department’s number of new jobs in the US