The ADP National Employment Report offers a monthly overview of nonfarm private sector employment in the U.S., utilizing actual payroll transaction data. It is commonly referred to as the ADP Jobs Report or ADP Employment Report.

This report is sponsored by Automatic Data Processing Inc., which has been producing it since 2006 and manages payroll for approximately 20% of U.S. private employment. The ADP National Employment Report is considered a valuable precursor to the more widely monitored Employment Situation report released by the Bureau of Labor Statistics.

The ADP National Employment Report provides an independent estimate of changes in U.S. nonfarm private employment, based on actual, anonymized payroll data from client companies served by ADP. The report includes details on the total private employment change for the current month, weekly job data, and wage insights from the previous month.

This report is made available to the public each month at no cost, offering insights into the U.S. labor market and serving as a credible source of information for businesses and governments.

The report includes the following payroll-based employment information:

• Total U.S. private employment
• Employment in U.S. goods industries (manufacturing, mining, and construction)
• Employment in U.S. service industries
• Employment categorized by company size (small: 1-49 employees, medium: 50-500 employees, large: 500+ employees)

If you work for a non-government company, your paycheck may be processed by Automatic Data Processing Inc. (ADP), which manages payroll for about 20% of U.S. private employment. This positions ADP uniquely to observe trends in the national labor market.

Traders often view the ADP report as a precursor to the Bureau of Labor Statistics' release of Non-Farm Payrolls (NFP) due to the correlation between the two. Additionally, forex traders monitor this report for similar reasons as the Employment Situation report. Strong employment growth can lead to increased inflationary pressures, raising the likelihood of interest rate hikes by the Federal Reserve.

The ADP National Employment Report provides an independent assessment of the U.S. labor market, rather than a forecast of the Bureau of Labor Statistics' monthly NFP report. It aims to deliver “high-frequency measures of employment, including jobs and wages, for a clearer, near real-time evaluation of the labor market.”

ADP’s anonymized payroll data, based on 25 million workers, seeks to offer a more representative view of the U.S. labor market and is intended to complement official government data. The two reports analyze the labor market from different perspectives.

For instance, in the BLS survey, a person is counted as employed if they received pay during the week that includes the 12th day of the month, while the ADP report counts how many individuals were actually on the company’s payroll during that month.

In addition to being an independent measure of U.S. employment data that complements government statistics, the ADP report differs in several ways:

• Government employees are excluded.
• Since the data is based on payroll, self-employed individuals are not counted.
• The report is not as detailed as the BLS Employment Situation report.

Traders focus on the implications of the report for the economy in the near term. A strong report suggests significant hiring in the private sector. Increased employment leads to higher household income, which in turn boosts consumer spending.

When currency traders analyze this report, they assess its potential impact on economic growth forecasts, inflation predictions, and whether these changes might prompt the Federal Reserve to adjust interest rates. Fed officials continuously monitor data for signs of possible inflationary pressures.

For example, robust job growth results in fewer unemployed individuals, allowing workers to potentially demand higher wages. Rising wages increase disposable income, leading to greater demand for goods and services, which can drive prices up (inflation).

If the market interprets the report as supportive of interest rate hikes by the Fed, it would be bullish for the U.S. dollar. Conversely, if the report suggests support for interest rate cuts, it would be bearish for the U.S. dollar. Job growth of less than 100,000 per month may indicate a weakening economy.

By monitoring job trends, one can gauge the tightness of the job market. If inflation is a concern, it is likely that interest rates will rise, while bond and stock prices may decline.

The report is published monthly, two days prior to the Bureau of Labor Statistics' NFP release, and can be found on BabyPips.com’s economic calendar. Previous months’ data, consensus estimates, and actual releases are also accessible.

The ADP National Employment Report is published monthly by the ADP Research Institute in collaboration with the Stanford Digital Economy Lab. It is released on the first Wednesday of each month at 8:15 am ET.