The market remained in a wait-and-see mode yesterday ahead of key reports about the employment picture this week. The all-important nonfarm payrolls report comes out Friday morning. But we got a preview of the December employment situation from a very strong ADP report.
In a blowout report, the ADP reported 297,000 jobs for the month, compared to market expectations of around 100,000. This level of outperformance, the strongest in the report’s history, would raise expectations for similar outcome on Friday, where expectations are for gains of around 140,000.
Some skepticism would be justified following today’s strong report. The ADP has not been doing a good job of predicting the BLS report in recent months. Last month, the ADP report came out with much better numbers for November, but the BLS report was significantly below that level.
Irrespective of what happens on Friday, one thing is quite clear; the labor market is improving. We saw that in the Initial Claims data last week and then today’s ADP report. This makes me confident that pace of labor market improvement will be on a much higher level in the New Year.
Sheraz Mian
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