Reclaiming Common Sense

January ADP Report Released this Wednesday

Potential is for a Strong January before they release revisions next month

The ADP Payroll report on Private Payroll creation and losses is released the Wednesday prior to the monthly government Employment Situation Report, or jobs report. The January Jobs Report came out with a revisions to the prior years data, plural, which means that the ADP report posts its revisions to prior years data with the release of their February Jobs Report. We already know that the government numbers are expected to be revised lower from their latest values. Will ADP make their revisions this month or next month? Either way, we only have the seasonally adjusted ADP data to compute possible month to month and January to January changes.

The Month to Month data is expected to grow by 0.16% to 0.20%. The sectors with the largest expected growth rates are Construction, Manufacturing, Professional Business Services (PBS,) Other Services (OS,) Financial Services (FIRE,) Leisure and Hospitality (LAH,) and Education and Health Services (EHS.) Natural Resources may drop this month due to the "demand destruction" for oil as a result of the Wuhan Virus.The potential range of expectations is 208,000 to 260,000 payroll positions added this February, based on month to month changes.

The February to February  data is pointing toward  A growth rate of . 1.52% to 1.58%. This is very low for an expanding economy.  The sectors that are expected to have the highest growth rates are Natural Resources (M/L,) Construction, PBS, LAH, EHS, FIRE and TTU. If we grow .52%, as we did last month, then the bottom of expectations is 195,000 positions. It is more likely that we will grow between 1.54% and 1.58% or between 221,000 and 272,000 positions.

Watch the revisions this month and next month. The past two February ADP payroll reports have had massive revisions. Watch the data this month also because the seasonal factors used to convert the non-seasonally adjusted CES worker data to the headline Seasonally Adjusted CES worker data was historically low. The SA CES could have been reported over 400,000 workers for January. If last month's January data is revised down by 30,000 from 293,000 to 263,000 this would give a bounce of 30,000 potions to February. A 208,000 number could be boosted to 238,000. Expect a number between 220,000 and 260,000 before revisions.

This month we receive the Annual  revisions to the ADP data.   Not only will the December 2019 and January 2020 data be revised, we could see the data revised back to 2015 or further. Will former President receive another boost to his payroll data?


Different Data Sets - Different things being measured. The ADP data is Private Sector Payroll Data. The headline Non-farm Payroll (NFP) data is comparable to the sectors used by ADP. The problem is that the Current Employment Statistics (CES) NFP data includes government workers. The CES worker and Wages data set is different from the Current Population Survey (CPS) Jobs and unemployment data set.

Expect all sectors except Mining and Logging (Natural Resources) to grow month to month. Expect all sectors to add payroll positions February to February.  Last month we started at our best pace since 2006, according to the ADP Payroll Private Sector data.  This month the data is "Coronavirus proof*." The influx of cases started well after the data for February were collected, plural. We might not match the February 2006 level of payroll additions this February. Expect something around 250,000 prior to the revisions.

It's the Economy.

(*More people have been shot in Chicago since the first of the year than habrve the Wuhan Virus in the United States. More people have dies of gunshot wound in Chicago this year than have died of the Wuhan Virus in all of the United States.)

It's the Economy.