ADP Employment Change Better Than Anticipated

Alan Penny

8 January 2020

2 min read


  • Employment Change much higher than initially expected
  • Gives a general direction of Non-Farm Payrolls on Friday
  • Federal Reserve paying close attention

During the early hours of Wednesday, the ADP Non-Farm Employment Change figures in the United States were released. These were conducted by Automatic Data Processing, the largest public payroll company in the United States.

This indicator is released a couple of days ahead of the official Bureau of Labor Statistics figures and gives the market participants some direction as to where the official figures could go.

Strong jobs figure likely

The ADP Employment Change figures came out at 202,000 jobs added for last month, much better than the anticipated 160,000. Because of this, it will likely have traders thinking that the jobs figure on Friday will be stronger than anticipated, and it should have a good effect on stock market valuations.

as the consumer goes, so goes the valuation of corporations

After all, as long as there are plenty of people employed in the United States, the consumer can continue to lift the markets. The consumer is 70% of the US economy, so it does make sense that as the consumer goes, so goes the valuation of corporations.

While this announcement isn’t necessarily a one-to-one correlation, it does give an idea as to whether or not the official figures will come out better or worse than anticipated. As it beat estimates, Wall Street analysts may start to suggest that the jobs number will be higher on Friday. That could have people looking for better-than-anticipated results.

All things being equal, this is a very bullish number for the United States, which has had some less-than-impressive results lately.

Furthermore, with the United States and China looking more and more likely to sign the “Phase 1 deal” on January 15, traders will begin to look at some of those recent sluggish economic numbers through the prism of the trade war.

US to lead the G10 pack

Going forward, the United States should continue to lead the rest of the G10 economies as long as its citizens are employed. This is a good sign that perhaps employment will continue to impress, giving strength to the US stock markets, and of course anything consumer-related.

In fact, that sector may probably have some catching up to do as it has been quite lackluster lately. All in all, it looks as if there may be a continuation of what the case for the last couple of years has been.

Meanwhile, the Europeans are starting to play catch-up, so that may cause a small hiccup along the way. Either way, the United States still looks strong.

Written By
Alan Penny

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