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ADP: Expect a Positive Bounce in Jobs Data This Month

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ADP National Employment Report

The ADP National Employment Report is a monthly report that measures the change in total US non-farm employment. ADP is a human capital management solution provider that has operations across the globe. It processes payroll data for ~24 million workers spread across different industries in the US. The report is prepared by using actual and anonymous payroll data from ADP’s 411,000 clients. The report provides insight into Friday’s non-farm payroll data.

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One of the best months in 2017

According to the ADP National Employment Report in October, US private sector employment increased by 235,000 jobs in October. Non-farm jobs have bounced back from a downward revised 110,000 jobs in September. The September estimate was revised from 135,000 to 110,000. However, it was still a far cry from the estimate of 33,000 job losses in September from the Bureau of Labor Statistics.

ADP’s vice president and co-head of the ADP Research Institute, Ahu Yildirmaz, commented in the report that the US employment market remains strong. It has bounced back from the hurricane slump. So far, October has been one of the best months for jobs this year.

Market reacted to ADP’s report

Financial markets (SPY) consider the ADP National Employment Report as a preview to the non-farm payrolls data from the Bureau of Labor Statistics, which is released on the first Friday of every month. With the focus shifting to the December rate hike after the FOMC left rates unchanged at its November meeting, a positive surprise from jobs data could boost bond yields (BND) and the US dollar (UUP). Although a December rate hike has mostly been priced in, any negative surprise from jobs data could induce volatility (VXX) in the bond and currency market (AGG).

In the next part of this series, we’ll analyze the ADP National Employment Report and understand which sectors reported the best increase in jobs last month.

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