Is The ADP Payroll Number a Trap?
January 5, 2012 3:49 pm
From Andrew Horowitz of The Disciplined Investor:
There has been a good deal of discussion around the web and other media outlets concerning the rather extreme reading on today’s ADP payroll report. The most often cited item is the regular December aberrations that are seen with ADP and potential distortions that have occurred.
If we were to only isolate the last two years, it does appear as if the December reports have a signifiant differential from expectations and the NFP report. But that may be simply coincidental.
Here is the data over several years with the month of December highlighted.
Looking further back, the month of November is often the peak during the range. That makes sense as hiring is much more common at the end of the year into the holiday season. So, it appears that the grumblings are a bit off base. That does not mean that we will see as huge of a number in Friday’s report as ADP and NFP do not often report in lockstep.
But whatever the reason, it is rather impressive to see hiring as robust as it is – considering the state of the global economy. Is this the turning point? Maybe, but it sure does not look like it when all of the economic numbers are put together.
That said, over history, turning points have come just when most believe that is will never arrive.