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. Normally the January Jobs Report comes out with a revision to the prior year's data which means that the ADP report posts its revisions 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 0.14% to 0.18%. There are five sectors that are expected to experience the largest growth: Construction, Natural Resources (M/L,) Leisure and Hospitality (LAH,) Education and Health Services (EHS,) and Profession Business Services (PBS.) The only sector that is expected to trim seasonally adjusted payrolls is Trade, Transportation, and Utilities (TTU,) as Santa's delivery crew takes a well deserved vacation. If we grow by 0.14% month to month then we should have an addition of 182,0000. If we grow by 0.18% we could have a number of 234,000. Remember that last January the Advance ADP number was 213,000, it was revised to 300,000 positions with the release of the February Advance ADP report, and January was revised again with the release of the March Advance Report, ending at 264,000 payroll positions created.

The January to January data is pointing toward  A growth rate of 1.49% to 1.53%. This sounds weak. All sectors are expected to grow January to January, even Information (IT,) and the largest growth rates are expected in Natural Resource, Construction, PBS, LAH, and EHS. If we grow at just 1.49% then we should add 220,000 payroll positions. If we grow at just 1.53% then we should see the addition of 271,000 payroll positions. We grew at 1.76% during January 2017, 1.83% during January 2018, and 2.20% during January 2019, even after significant revisions to the 2017 and 2018 data with the past two February ADP revisions. If we hit 1.57% then we could hit 322,000 positions added.

Watch the revisions this month and next month. The November ADP number is 129.561 million positions. The December number is 129.763 million positions. If November and December are revised up by a combined 30,000 positions the January ADP number will be reduced by 30,000. We could come in at 129.781 if we added 220,000 positions. If December is revised up to 129.591 million then that 220,000 number would be reported at 190,000 and we would still hit 129.781 million workers.

This month we receive the CES  "Benchmark Revisions."  The benchmark revisions are expected to be downward revisions of 514,000 for the non-farm payroll data and 501,000 for the Private Sector data. Current the December Private Sector data is at 130.344 million non-seasonally adjusted and 129.737 million seasonally adjusted. Currently the ADP Payroll data, seasonally adjusted private sector is close, at 129.763 million.

Expect some revisions to occur. Expect month to month and January ADP growth to be reported. Do not be surprised if the data comes in around 220,000.  We could challenge last January's 264,000 and even push up over 300,000. All sectors should grow month to month, seasonally adjusted, and all but one sector should grow January to January.

It's the Economy.