ADP large miss; But does it matter for NFP?
Joe Perry September 1, 2021 10:32 PM
Looking at the series over the passed few months, there is volatility between ADP and NFP data
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!
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.
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.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.