Preview: Due February 5 - U.S. January ADP Employment - Less sensitive to bad weather than non-farm payrolls
We expect a 145k increase in January’s ADP estimate for private sector employment growth, which is significantly above our 95k increase for January’s private sector non-farm payroll, which is likely to be more sensitive to bad weather than the ADP report. We expect overall non-farm payrolls, including government, to rise by 125k.
December’s 3-month average for the ADP report of 137.5k is almost identical to the 3-month private sector non-farm payroll average of 138k, though October saw the ADP significantly outperform as the non-farm payroll showed more sensitivity to hurricanes and strikes, while payrolls outperformed in November and December as catch up from the weak October was seen.
We expect January’s non-farm payroll to be restrained by bad weather, more due to exceptionally cold conditions in much of the country than the more local destruction caused by the Los Angeles fires, though both provide downside risk which is more likely to be reflected in the non-farm payroll than ADP data.
Our forecast for the ADP report is marginally above the 3-month average, reflecting a still healthy underlying labor market picture despite the short-term downside risk.
