Always Noisy ADP Better Than Expected, Market Confused About NEW QE

The endless noise and confusion that is the ADP private jobs report (a company which incidentally just missed on its top line), and whose forecast record for NFP is simply atrocious, has posted its second beat in a row, coming at 163K, on expectations of a 120K print, and down from last month's revised 172K. And there is the problem: last month ADP said private industries added 176K jobs. The BLS' NFP print disagreed, coming in at less than half, so sadly anyone trying to gauge what happens on Friday based on today's data will be largely mistaken. But this is all we get before today's FOMC statement, so the bets have to be made, and the market has to decide: will Bernanke make it rain, or won't he, based on 3 days in which economic data has somehow managed to scrape better than expected results. In terms of what really matters: manufacturing jobs as a proxy of the US real economy, was, as usual, sad: +6,000.


ADP vs NFP and why the two simply do not correlate at the level of granularity required by HFT kneejerks:

And another way to visualize the "correlation" courtesy of John Lohman:

From the ADP report:

Employment in the U.S. nonfarm private business sector increased by 163,000 from June to July, on a seasonally adjusted basis. The estimated gain from May to June was revised down slightly, from the initial estimate of 176,000 to 172,000.


Employment in the private, service-providing sector expanded 148,000 in July after rising a revised 151,000 in June. The private, goods-producing sector added 15,000 jobs in July.


Manufacturing employment rose 6,000 this month, following a revised increase of 9,000 in June. Employment on large payrolls—those with 500 or more workers—increased 23,000 and employment on medium payrolls—those with 50 to 499 workers—rose 67,000 in July.


Employment on small payrolls—those with up to 49 workers—rose 73,000 that same period. Of the 67,000 jobs created on medium- sized payrolls, 4,000 jobs were created by the goodsproducing sector and 63,000 jobs were created by the service-providing sector.


Construction employment rose for the second consecutive month, adding 5,000 jobs. The financial services sector added 9,000 jobs from June to July, marking the twelfth consecutive monthly gain.