ADP National Employment Report

What Is the ADP National Employment Report?

The ADP National Employment Report is a monthly report of economic data that tracks levels of nonfarm private employment in the U.S. It is also referred to as the ADP Jobs Report or the ADP Employment Report.

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:

1. A national snapshot showing the change in the number of nonfarm private payrolls, which also breaks that change down by the size of the business and industry.
2. Small businesses: Breaks the change in payrolls down by size (small and very small) and broad sector (goods-providing or services-providing).
3. Franchises: Breaks changes in employment in that sector down by industry, such as restaurants, accommodations, and real estate.
4. Regional assessment of employment trends, highlighting changes in six states (California, New York, New Jersey, Texas, Florida, and Illinois), for which it provides sector and industry breakdowns.

Example of the ADP National Employment Report

In June 2021, private-sector employment increased by 692,000. That figure represents a mild decrease from the prior month, but it is still substantially lower than the job creation seen over the past six months.

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 is in a robust recovery. Payrolls were up by three million in the first half of the year but were still seven million jobs short of the pre-business lockdown levels.

Special Considerations

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 non-farm private employment data since 2003. As you can see, the Great Recession 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.