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ADP Reports Postponed, Will New Methodology Be Better NFP Predictor?

US DATA
ADP have announced they are pausing their monthly Employment Reports in order to implement a new methodology, and will not issue a new one until Aug 31 (the Jul 7 and Aug 3 releases are cancelled).
  • Market-wise, the ADP Employment Report has been seen as a somewhat useful indicator of the general direction of monthly nonfarm private payrolls which typically comes out a day or two later.
  • But it hasn't historically been seen as a particularly reliable signal, not least because prior months are often revised significantly due to their methodology - it's a model-based indicator that takes into account their own proprietary payrolls data and previous months' nonfarm payrolls readings, among other inputs.
  • The new methodology is being designed with the Stanford Digital Economy Lab in order to emerge with "a more robust, high-frequency view of the labor market and trajectory of economic growth".
  • ADP often gets market attention but is largely shrugged off quickly, so it will be interesting to see over time if the new data and methodology makes it a better predictor of NFPs going forward (and therefore more market-moving).
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