Special Edition Jobs Report: 01/09/2023
Jobs Report Edition: 01/09/2023 - Will the NFP Outperform or Underperform?
CONTENTS
WHAT EXACTLY ARE THE ADP AND NFP JOB REPORTS?
THE MODEL’S RESULTS AND INTERPRETATION FOR THIS WEEK
DISCLAIMER
WHAT EXACTLY ARE THE ADP AND NFP JOB REPORTS?
The term non-farm payrolls, frequently abbreviated as NFP, refers to the monthly report issued by the US Bureau of Labor Statistics that gives information on the number of employment created or eliminated in the US economy, excluding agricultural jobs.
Data from a survey of over 140,000 enterprises and government organizations, or about 1/3 of total non-farm private sector employment in the US, are included in the report.
The NFP sheds light on the state and trajectory of the US economy, is regarded as a crucial economic indicator. The NFP data is specifically watched closely by analysts and investors for clues about changes in employment, wage growth, and general economic growth. The Federal Reserve’s actions and those of other economic policymakers can be influenced by information in the report about the unemployment rate and other labor market indicators. The NFP is published every first Friday of every month.
In parallel, there is another indicator published two days before the NFP.
The private company Automatic Data Processing (ADP), which offers payroll and human resource services to businesses, publishes the ADP nonfarm payroll report. The Non-Farm Payrolls report from the Bureau of Labor Statistics is usually released a few days before the monthly release of this one.
The ADP report estimates the number of employment created or eliminated in the US economy’s private sector, excluding government and agricultural sectors. The ADP report, like the official Non-Farm Payrolls report, is closely monitored by analysts, investors, and policymakers as a crucial sign of the state of the economy and developments in the labor market.
The ADP report can offer a helpful preview of what to anticipate from the official statistics, even though it is not as thorough or reliable as the official Non-Farm Payrolls report. It also offers insights into particular industries or regions of the US economy that may not be as clear from the official figures because it is based on data from a sizable sample of ADP clients.
The model would have the following assumption: The ADP’s change from the previous month can predict the NFP’s change from the previous month. It is basically another way of saying that if the ADP rises this month, then the NFP will rise. With around 60% accuracy, this simple model predicts whether the NFP will outperfom or underperform expectations.
THE MODEL’S RESULTS AND INTERPRETATION FOR THIS WEEK
Ahead of the NFP release this Friday (01/09/2023), the ADP came in at +177,000 which is negative from last month.
Last month’s NFP: 187,000
Economists’ forecast for the NFP this month: 170,000
Model’s conclusion: NFP to underperform the economists’ forecast
DISCLAIMER
Every information contained in the report is solely for the purpose of showing another angle. Since it is NOT investment advice or trade recommendations, you must NOT use the report as the sole reason for your trading and investing activities.
Trading is fun, enriching, and interesting but not when it comes at the expense of your hard-earned funds. Do not risk what you cannot afford to lose. You must only trade with money you have already considered gone and you must not use trading as your sole revenue generator. Risk management is even more important than the trading strategy itself, make sure to master it.
Data can have many representations and the information presented is but one side of the story which may be incomplete. All back-testing and forward testing results reflect their own time period and not the future as is the case in every research piece.