ADP Report Sparks Caution Ahead of Friday’s Key Payroll Release
- Written by: James Skinner
-
Differing methodologies between how the ADP and BLS nonfarm numbers are counted mean the ADP number should have been relatively unaffected by the recent hurricanes. But it felll by more than 100,000 during September.
Wednesday’s ADP employment report threw up the same number of questions as it solved around US jobs numbers in September.
The monthly Automatic Data Processing Inc report showed the US economy adding 135,000 new jobs in September, down from 237,000 the previous month, although a touch ahead of economist forecasts for 131,000 jobs gains.
It comes just after a month where the US was hit by a series of hurricanes and ahead of Friday’s all-important nonfarm payrolls number from the Bureau of Labor Statistics.
“If the ADP measure was up only 135,000, then there could be downside risks to our estimate that non-farm payrolls increased by 100,000 (consensus 95,000). We’ll find out one way or the other on Friday,” says Paul Ashworth, chief North American economist at Capital Economics.
Consensus forecasts for the ADP and BLS numbers were the lowest recorded for more than five years as economists had anticipated a hit to commercial and employment activity across several states due to disruption from hurricanes Harvey and Irma.
Originally, markets anticipated nonfarm payrolls growth of 85,000 this Friday, but the number has crept upward of late after other barometers showed the US economy motoring on largely undeterred during the month.
“That said, even if the NFP figure comes in weaker than expected, the markets and the Fed will chalk it up to the hurricanes and largely ignore it,” Ashworth notes.
Differing methodologies between how the two are counted mean the ADP number should have been relatively unaffected by the recent hurricanes. But the number of new jobs added declined by more than 100,000 during September.
The US Dollar pared losses by a fraction in response to the release, prompting the Pound-to-Dollar rate to trade back below 1.3260 and the Euro-to-Dollar rate to drop below 1.1770.
