ADP large miss; But does it matter for NFP?

Looking at the series over the passed few months, there is volatility between ADP and NFP data

Jobs 1

ADP reported their assessment of the private Employment Change for the month of August.  The number of US jobs added to the economy was 374,000 vs and expectation of +613,000 and July’s downwardly revised print of +326,000.  Not surprisingly, the service sector led the way with +329,000 new jobs. 

Before everyone gets too nervous about the August Non-farm Payroll on Friday, lets look at how volatile the ADP estimates have been over the last few months vs estimates, and compare that to the Non-Farm Payroll prints:

Month                  ADP estimate                     (Initial) ADP Actual                      NFP Private Actual

May                       +650K                                    +950K                                    +492K   

June                       +692K                                    +600K                                     +662K

July                        +695K                                    +320K                                    +703K

August                   +613K                                    +374K                                      ???

As you can see from the chart above, only in June was the Actual ADP print within 100K of the estimate.  In May, July, and August, the prints were +/- 300K from the estimate! 

What are Non-Farm payrolls?

Between actual ADP data and Actual NFP Private jobs,  the average miss was even higher. In May, the difference between ADP and NFP Private jobs was -458K, in June it was +62K, and in July it was +383K.   Therefore, at least in recent months, we can conclude that on a month to month basis, ADP Private Payrolls are not necessarily a good predictor of NFP Private Payrolls.  Note as well that government jobs must be added to the NFP Private payrolls to get the total number of Non-Farm jobs added to (or taken away from) the economy for a particular month.

See our NFP preview here!

EUR/USD moved higher after the ADP print and the US Dollar Index moved lower, as bond yields moved lower.  On a daily timeframe, EUR/USD is bumping up against horizontal resistance near 1.1850 and trying to close above a longer-term trendline near 1.1835.    Resistance above those levels is 1.1890 and 1.1900, which is a series of highs from late July/early August (It is also the completion of the recent  descending wedge breakout.)

Source: Tradingview, Stone X

On a shorter-term 240-minute chart, EUR/USD has been moving higher in an upward sloping channel since August 20th.  There is additional resistance at the top channel trendline near 1.1865.  Support is at the bottom trendline of the channel near 1.1805, ahead of horizontal support at 1.1727 and 1.1702.  Also notice that the RSI is diverging from price in the near-term.  Therefore, EUR/USD may be ready for a pullback.

Source: Tradingview, Stone X

The ADP Employment Change for August was much worse than expected.  However, looking at the series over the passed few months, there is a large amount of volatility between ADP and NFP data.  Therefore, traders shouldn’t rely on the ADP print alone to help determine an estimate of Non-Farm Payrolls.

Learn more about forex trading opportunities.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account