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ADP: The US Job Market Could Spring Another Positive Surprise

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Mar. 8 2018, Updated 2:16 p.m. ET

About the ADP National Employment Report

ADP, a human capital management solution provider, releases a monthly report on US non-farm employment. This report contains changes to the level of hiring and employment across different sectors in the United States. This organization processes the payrolls of more than 24 million workers in the United States.

Due to its presence in multiple countries, ADP has a unique insight into the trends in employment markets. Its monthly report is prepared by using actual, anonymous payrolls data of 411,000 US clients that ADP services. Released two days before the non-farm payrolls data, this report prepares the markets for any surprises in the jobs report.

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February ADP report highlights

As per the ADP February National Employment Report, US private sector employment added 235,000 jobs in February. The number of jobs added in February was marginally lower than the upwardly revised January reading of 244,000 jobs. Ahu Yildirmaz, the vice president of ADP Research Institute, said that an increase in consumer spending led to persistent gains in the leisure, hospitality (PEJ), and retail (XRT) industries.

Market reaction to the ADP report

The US financial markets consider the ADP report a preview to the Bureau of Labor Statistics’ (or BLS) report and react accordingly, but this week, markets remained focused on President Donald Trump’s tariffs on steel (SLX) and aluminum (FOIL) imports. Markets, however, could react to the non-farm payrolls data that are scheduled to be reported on Friday. It was the increase in jobs and wages that triggered the equity market’s (VOO) correction at the beginning of February.

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

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