CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

ADP large miss But does it matter for NFP

September 1, 2021 11:32 AM

ADP large miss; But does it matter for NFP?

ADP reported their assessment of the private Employment Change for the month of August.  The number of US jobs added to the economy was 374,000 vs and expectation of +613,000 and July’s downwardly revised print of +326,000.  Not surprisingly, the service sector led the way with +329,000 new jobs. 

Before everyone gets too nervous about the August Non-farm Payroll on Friday, lets look at how volatile the ADP estimates have been over the last few months vs estimates, and compare that to the Non-Farm Payroll prints:

Month                  ADP estimate                     (Initial) ADP Actual                      NFP Private Actual

May                       +650K                                    +950K                                    +492K   

June                       +692K                                    +600K                                     +662K

July                        +695K                                    +320K                                    +703K

August                   +613K                                    +374K                                      ???

As you can see from the chart above, only in June was the Actual ADP print within 100K of the estimate.  In May, July, and August, the prints were +/- 300K from the estimate! 

What are Non-Farm payrolls?

Between actual ADP data and Actual NFP Private jobs,  the average miss was even higher. In May, the difference between ADP and NFP Private jobs was -458K, in June it was +62K, and in July it was +383K.   Therefore, at least in recent months, we can conclude that on a month to month basis, ADP Private Payrolls are not necessarily a good predictor of NFP Private Payrolls.  Note as well that government jobs must be added to the NFP Private payrolls to get the total number of Non-Farm jobs added to (or taken away from) the economy for a particular month.

See our NFP preview here!

EUR/USD moved higher after the ADP print and the US Dollar Index moved lower, as bond yields moved lower.  On a daily timeframe, EUR/USD is bumping up against horizontal resistance near 1.1850 and trying to close above a longer-term trendline near 1.1835.    Resistance above those levels is 1.1890 and 1.1900, which is a series of highs from late July/early August (It is also the completion of the recent  descending wedge breakout.)

Source: Tradingview, Stone X

On a shorter-term 240-minute chart, EUR/USD has been moving higher in an upward sloping channel since August 20th.  There is additional resistance at the top channel trendline near 1.1865.  Support is at the bottom trendline of the channel near 1.1805, ahead of horizontal support at 1.1727 and 1.1702.  Also notice that the RSI is diverging from price in the near-term.  Therefore, EUR/USD may be ready for a pullback.

Source: Tradingview, Stone X

The ADP Employment Change for August was much worse than expected.  However, looking at the series over the passed few months, there is a large amount of volatility between ADP and NFP data.  Therefore, traders shouldn’t rely on the ADP print alone to help determine an estimate of Non-Farm Payrolls.

Learn more about forex trading opportunities.


StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024