Thursday, 4 September 2008

ADP Report Suggests Modest Declines in NFP's

Yes it's that time again when we get probably the most watched yet most unreliable economic data of the month. The ADP employment report released today is seen as a proxy for tomorrow's non-farm payroll report from the bureau of labor statistics.

Today's ADP report for August saw a decline of -33,000 in private sector payrolls. Remember the NFP report includes government jobs. The general rule of thumb is to add 25k -30k. That would suggests the BLS report should show a flat reading for August.

However as mentioned many times here before, the ADP report is notoriously unreliable in predicting non-farm payrolls from month to month and has been fairly consistently on the high side compared to the BLS number.

So basically you can forget about the ADP report. You might as well pick a random number anywhere between -150 and +50k for tomorrow's NFP number and you'll have as much chance as any economist of getting it right. And don't forget to pay attention to the previous months revisions.