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Should We Trust the ADP Jobs Report?

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How fairs this lousy labor market of ours?

The latest numbers from the ADP jobs report came in today better-than-expected. Specifically, ADP estimates private payrolls rose 187,000 in January versus expectations of 140,000 although December was revised down by 50,000 from an original 297,000.

But the bottom line, say strategists, is that even with the December downward revision, the two month average is a solid 217,000.

Still, from a market perspective, Friday’s payroll figure is always more relevant. So can investors depend on the ADP report to accurately predict that headline-making number?

Don’t count on it, says Gluskin Sheff’s David Rosenberg.

He says it doesn’t help anyone accurately predict the nonfarm payroll data. Through 2010, Rosie writes, the average absolute “miss” was 90,000 and when the typical headline figure is something around 150,000, he says, that “miss” is not exactly trivial.

“At what point do these folks at the ADP just throw in the towel and discontinue the survey?” Rosie wrote in a recent research report. “I mean, at what point do they finally just come out and tell us 'oops, our methodology is obviously doing more harm than good?'"
POSITION:  No positions in stocks mentioned.