ADP Non-Farm Payrolls Becomes the New DJIA

by on April 2, 2014 2:18 pm BST

According to ADP, the March ADP non-farms payroll slightly missed the 192K expectations, coming in at 191K. Equities and other risk assets trade modestly lower, but there is little action in pre-US market trading.

The overly optimistic love jumping on the, often inaccurate, ADP report. “We’re starting to see the recovery in the data that we’ve been hoping for,” said Brett Ryan, an economist for Deustche Bank Securities. Ryan believes that the ADP report will prove to the world that the US economy is growing – I’m sure with the footnote “albeit, at a slow, steady pace.”

However, the ADP report holds less water than the heavily followed non-farm payrolls report issued by the Bureau of Labor Statistics (BLS). The ADP non-farms payroll report is not a barometer of the overall labor market. It is the equivalent of how the Dow Jones Industrial Average (DJIA) is viewed by traders. Sure, it’s nice when it’s beating expectations, but it poses nothing more than a mere trading opportunity.

Remember January’s massive 238K ADP report that got everybody so excited? They were not as excited when the official non-farm payrolls report issued a horrendously poor 74K jobs added. Revisions to the ADP cut the final number to 127K, and the non-farm payrolls data was only revised upward by 10K.

But, the discrepancies do not stop there:



The only question now is: if the non-farms disappoint on Friday, what will the new cause of blame be?