Ignore the ADP employment indicator because it lags payrolls. We stick to our above-consensus forecast of a 275k increase in payrolls in Friday’s jobs report.
ADP employment was slightly weaker in November than the consensus estimate (+208k vs. 222k). However, like many analysts, we are wary of the ADP report because in the past it has missed the official payrolls number in the jobs report big-time.
More specifically, ADP employment looks like a lagging indicator of payrolls, which makes some sense it is partly based on lagged official data (in addition to raw employment data generated by firms which use ADP for payrolls processing). Thus, today’s November ADP reading is very close to the October BLS number (see chart).
As a result, we stick to our above-consensus forecast of a 275k increase in payrolls in Friday’s jobs report. The consensus estimate is +230k.
ADP lags payrolls
Nordea