ADP employment report preview

ADP employment data to be released at 12:15 GMT is today’s most vital dockets from the US to be watched by market participants. This report is one of the key data that investors will use to gauge US economic strength.

What is ADP employment?

• The report is a measure of non-farm private sector employment which is obtained by utilizing an anonymous subset of roughly 400,000 U.S. businesses which are clients of ADP.

• This data is a very good measure of employment strength of the economy and a good precursor of Nonfarm payroll data.

Previous performance –

• Non-farm private sector employment grew at 177,000 in August. In July payroll grew by 176,000.
• Small business sector hiring at 63,000.
• Employment in franchise increased by 19,200.
• no job was added in the manufacturing sector.
• 6,000 jobs were lost in goods-producing sector.
• Construction sector lost 2,000 jobs.
• 15,000 jobs were added in financial activities.
• Services sector remains job provider. Payroll added 183,000 people in August.

Expectation Today –

• Headline number is expected to decline to 166,000 as per median estimate.

Market Impact –

• Any gain above 200,000 will be considered to be very good and rate hike bets are likely to rise once more, providing support to the already rising dollar.

• Data below 150,000 likely to give rise to concerns regarding US economic prowess and investors would have to consider their rate hike outlook, and there could be a run towards safety. However, there may not be major decline in the dollar even in that case.

Dollar index is currently trading at 96.1, down 0.1 percent for the day.