Given the market’s fixation on labor market developments the rest of this week, it is perhaps appropriate to call it a Jobs Week.
Coming after today’s Automatic Data Processing (ADP) report, we get the weekly Jobless Claims tomorrow and the all-important non-farm payroll report for March. Should these reports, particulaarly Friday’s report, come out better than expected, look for stocks to make a clear upward move.
We made a solid start to the Jobs Week this morning, with the ADP report coming in-line with expectations. A total of 201,000 private-sector jobs were created in March, compared to expectations of 205,000, according to Bloomberg. The report showed strength across the board, with solid gains in both the service as well as manufacuring sectors.
ADP’s position as the nation’s largest payroll processor puts it in an advantageous position to evaluate changes in private-sector payrolls. And since this report comes out each month just days ahead of the government’s monthly non-farm report, the market tries to use it as a proxy for the later report.
But the ADP’s track record in accurately foretelling the government report has been less than stellar. February was an exception, though, when the ADP number of 208,000 (revised today from 217,000 originally reported) came close to the government’s number of 222,000 private sector job creations.
We will have to wait till Friday morning to see if February’s accuracy was a one-off event or the start of a trend. But one thing is undeniable — today’s ADP report is another reassuring sign that the labor market is on the mend.