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Adp -40k?

  • #1
  • First Post: Jan 3, 2007 7:41am Jan 3, 2007 7:41am
That is a shocker! a -40K ADP for December is trully USD Negative.

But Traders are now trading the revision. Last nov's NFP is 130K+; a fairly high number considering the previous numbers. I think this could be revised down!

Though yearends find a lot of companies hiring extra hands; Walmart was said to have hired 50K+ extra hands to help in the busy Nov and Dec sales. BUT I learned that these extra hands are not included in the NFP numbers.
  • #2
  • Jan 3, 2007 7:53am Jan 3, 2007 7:53am
yeah that report wasnt looking so hot. this friday should be a good test on the reliability of ADP numbers.

about the extra workers not showing up on the ADP report, where did you hear that? i havent read that, but i am assuming this happens because of the way ADP system works...it might take at least 30 days of employment before Walmart reports them to ADP. back when i ran my business, i know there was a lag from the time that we hired someone to the time that we reported them on our payroll (and we used ADP for our payroll).

anyway, interesting comments BK, thanks for getting me thinking more about this
Relax and be happy.
  • #3
  • Jan 3, 2007 8:01am Jan 3, 2007 8:01am
Merlin "about the extra workers not showing up on the ADP report, where did you hear that?"


this was a speculation on TNN just after 8:15 quoting something from CNBC's
MacroEconomics
  • #4
  • Jan 3, 2007 8:07am Jan 3, 2007 8:07am
merlin/bk

I heard on bloomberg ages ago the non farm numbers are seasonally adjusted, so dont expect any reaction to blockbuster numbers without confirmation of revisions. Though the Adp is fairly new and not so accurate
it has at least given an indication as to the number of new jobs being created, but not the all important unemployment rate, and costs.
  • #5
  • Jan 3, 2007 8:11am Jan 3, 2007 8:11am
Quoting smjones
Merlin "about the extra workers not showing up on the ADP report, where did you hear that?"


this was a speculation on TTN just after 8:15 quoting something from CNBC's
MacroEconomics
yeah i saw that one, but they are talking about the "seasonally adjusted" ADP numbers being questionable. like magicfx just said, the NFP is seasonally adjusted, meaning they have a multiplier that they apply each month in order to adjust it to seasonal trends. it takes years to develop this multiplier, because you have to figure out the "normal" job trends that happen from month to month on a regular basis. since ADP has been around less than 1 year, how could they possibly have the right multiplier? thats the debate that CNBC was having...
Relax and be happy.
  • #6
  • Jan 3, 2007 8:15am Jan 3, 2007 8:15am
a graph worth studying....
Attached Image
Relax and be happy.
  • #7
  • Jan 3, 2007 8:27am Jan 3, 2007 8:27am
Quoting merlin
since ADP has been around less than 1 year, how could they possibly have the right multiplier?
They have only been reporting their number for a year, but they have been a big name in the payroll biz for ages and I'm sure they have plenty of data about all those checks they have been generating.
  • #8
  • Jan 3, 2007 8:36am Jan 3, 2007 8:36am
Hey guys,

This -40K employment news can affect the ISM report ?
As i know the ISM Report is based 20 % in the employment numbers...


Your Thoughts,

Bart
  • #9
  • Jan 3, 2007 8:48am Jan 3, 2007 8:48am
If I'm reading that chart correctly the ADP report has a 89% correlation to the NFP report?
  • #10
  • Jan 3, 2007 8:54am Jan 3, 2007 8:54am
@merlin,

That piece of info I heard over at CNBC TV last month...


GBPUSD has moved 160+ pips for the day before ISM data.

I wonder whether GBPUSD would fall further if ISM is USD positive?... Hmmm
  • #11
  • Jan 3, 2007 9:02am Jan 3, 2007 9:02am
Quoting BurgerKing
@merlin,

That piece of info I heard over at CNBC TV last month...


GBPUSD has moved 160+ pips for the day before ISM data.

I wonder whether GBPUSD would fall further if ISM is USD positive?... Hmmm
Darn! I was impatient and closed it too early at 9548..
  • #12
  • Jan 3, 2007 9:54am Jan 3, 2007 9:54am
Quoting BurgerKing
Darn! I was impatient and closed it too early at 9548..
me too..
i closed at 9543...
  • #13
  • Jan 3, 2007 11:12am Jan 3, 2007 11:12am
When the ADP is this far away from the consensus expectation-it's been pretty bad. The market basically ignored it and the $ strengthened.

In order to accurrately trade the NFP-you need to hear the new number, then all the revisions. The you have to do the arithmatic and see if jobs were added or lost to the revision period-which may cover several months. Last time, October was revised down, but September was revised up enough so that for the Sept-Oct period-net jobs were added. To be really safe-the direction of the new number and revision should match.

For example-how would you trade it if the new number is below consensus, but the revisions are higher?
  • #14
  • Jan 3, 2007 1:44pm Jan 3, 2007 1:44pm
Quoting Keys
They have only been reporting their number for a year, but they have been a big name in the payroll biz for ages and I'm sure they have plenty of data about all those checks they have been generating.
your absolutely right, good point. the argument is that they are adjusting all of their internal numbers to try to predict official NFP, and this could skew their multiplier.
Relax and be happy.
  • #15
  • Last Post: Jan 3, 2007 1:45pm Jan 3, 2007 1:45pm
Quoting NewstraderFX
For example-how would you trade it if the new number is below consensus, but the revisions are higher?
unless the market showed a clear direction, i wouldnt trade it at all.

btw, revisions hold much less umph than the latest number. who cares what happened two month ago?!? its all about today, here and now....NEW information. now, i know im exaggerating a bit, because anyone who has lived through NFP day knows that revisions matter. but i would say, off the cuff, that 1 job in current report is worth 3 jobs in revised report.
Relax and be happy.
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