What Is the ADP National Employment Report?
The ADP National Employment Report is a monthly report of economic data that tracks the level of nonfarm private employment in the U.S. It is published by Automatic Data Processing, a company that handles payroll for about a fifth of all privately-employed individuals in the U.S. The ADP National Employment Report is also known as the ADP Jobs Report or the ADP Employment Report.
- The ADP National Employment Report is a monthly report of economic data that tracks nonfarm private employment in the U.S.
- The ADP Employment Report was launched in 2006.
- Automatic Data Processing Inc., the company that issues the report, handles payroll for about one-fifth of all privately-employed individuals in the U.S.
- The ADP National Employment Report is viewed as a useful preview to the more detailed Bureau of Labor Statistics' employment situation report.
- The ADP National Employment Report is divided into four separate releases.
Understanding the ADP National Employment Report
If you're not self-employed or a government employee, there is a decent chance that your pay statement is processed by Automatic Data Processing Inc. (ADP). The firm handles payroll for about a fifth of U.S. private employment, putting it in a unique position to survey trends in the nation’s labor market.
ADP collects data through the payroll services and benefits administration it provides to companies. It issues reports on its findings through a partnership with Moody’s Analytics.
The ADP National Employment Report is released two days prior to the Bureau of Labor Statistics' employment situation report, which is available on the first Friday of each month. Investors and economists see the ADP report as a preview of the more detailed and comprehensive government data release.
Details of the ADP National Employment Report
The methodology of the ADP National Employment Report is managed by Moody’s Analytics. The report is divided into four separate releases, using figures that are seasonally adjusted. Each report provides the following information:
- A national snapshot showing the change in the number of company payrolls, and also breaks that change down according to business size and sector.
- Small businesses: Breaks down the change in payrolls by size (small and very small) and broad sector (goods-providing or services-providing).
- Franchises: Breaks down changes in franchise employment by industry, such as restaurants, accommodations, and real estate.
- Regional assessment of employment trends, highlighting changes in six states (California, New York, New Jersey, Texas, Florida, and Illinois), with sector and industry breakdowns.
Example of the ADP National Employment Report
In December of 2021, private-sector employment increased by 807,000. That figure represented a strong increase from the prior month.
In the aftermath of severe economic damage—the result of government restrictions on social distancing and keeping businesses open—Moody’s said the findings showed that the labor market was showing strong growth. Payrolls were up by six million from the beginning of the year but four million short of pre-pandemic levels.
The ADP Employment report is published by a private company, not a government agency. But historically, its figures tend to align closely with the official figures from the Bureau of Labor Statistics.
The number of people that are employed can tell us a lot about the state of the economy. Total employment and the rate of unemployment are used to determine when the economy is in a recession. The chart below illustrates the monthly changes in nonfarm private employment data since 2002. As you can see, the COVID-19 pandemic coincided with a dramatic rise in unemployment.
A population that is fully employed and where many people are earning steady paychecks is synonymous with a strong economy. More real goods and services are being produced and, in turn, people are earning the income to buy them. More money is circulating, which triggers an increase in demand for goods and services, plus more job opportunities for people to help manufacture and sell them.
Eventually, demand for labor can outstrip supply. When this occurs, employees have greater bargaining power and can demand better wages, which can lead to falling corporate profits, higher inflation, and pressure to raise interest rates.
When Is the ADP National Employment Report Released?
The ADP Employment Report is usually published two days before the Bureau of Labor Statistics publishes its monthly employment report, which is issued on the first Friday of every month. Since the ADP report comes first, it is often used as a preview of the more thorough statistics from the government agency.
How Is the ADP Employment Report Different from the Bureau of Labor Statistics Report?
The main difference between the ADP Employment Report and the official BLS report is that ADP only covers non-farm, private employees. As a government body, the BLS survey also includes government employees. In addition, while the ADP only releases one set of numbers, the BLS report is updated to include companies that send in their survey responses after their report is published. Both reports have very similar methodologies and tend to yield very similar results.
Why Does the ADP Employment Report Have Higher Numbers than the BLS Report?
Beginning in 2017, economists began observing significant divergences between the ADP and BLS figures on national employment, with the ADP estimates consistently higher than government figures. This is likely due to subtle differences in methodology and sampling between the two bodies. ADP's data is based on the payrolls of their client companies, meaning that their figures must be adjusted to reflect national economic data.