February 5, 2025
As shown above the ADP survey shows a respectable correlation with the private sector portion of the payroll employment data to be released a couple of days later. And well it should. ADP, or Automatic Data Processing, Inc. is a provider of payroll-related services. Currently, ADP processes over 500,000 payrolls, for approximately 430,000 separate business entities, covering over 23 million employees. The survey has been in existence since January 2001, and its average error in the past couple of years has been 87 thousand.
The ADP report showed a solid jobs gain of 183 thousand in January after climbing 176 thousand thousand in December and 204 thousand in November.. In the past three months the average monthly increase is 188 thousand.
.Nela Richardson, the Chief Economist for ADP said, “We had a strong start to 2025 but it masked a dichotomy in the labor market. Consumer-facing industries drove hiring, while job growth was weaker in business services and production.”
Payroll employment has slowed gradually with job gains currently averaging 167 thousand per month. The labor market appears to be roughly in balance.
Given the ADP report, we are looking for payroll employment to rise by 150 thousand in January. We will get that report from the BLS on Friday. We also expect the unemployment rate to be unchanged at 4.1%.
Stephen Slifer
NumberNomics
Charleston, SC
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