The ADP employment report will be the highlight on the US calendar tomorrow.
Last week, ADP announced that it has partnered with Moody’s to ‘enhance’ the accuracy of the report, which has been sketchy at best.
For some reason, they say that by combining with a ratings agency and Moody’s economist Mark Zandi (who has a laughably bad track record) they will be able to put this indicator back on the rails.
Include the development of a new methodology to further align with the final, revised U.S. Bureau of Labor Statistics (BLS) numbers. A look back at historical data from 2001 to present using the new methodology shows a very strong correlation (96%) with the revised BLS numbers.
This isn’t the first time ADP has tried to revise the methodology but no matter how bad they miss, the market reacts to it anyway. If they can get it right, just this once, it will go a long way to restoring some credibility. Personally, I think it’s impossible to forecast the seeming randomness of non-farm payrolls seasonal adjustments and one-time factors.
