January 31, 2024

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 102 thousand.

The ADP report showed a jobs gain of 107 thousand in January after rising 158 thousand in December.  .

.Nela Richardson, the Chief Economist for ADP said, “Progress on inflation has brightened the economic picture despite a slowdown in hiring and pay. Wages adjusted for inflation have improved over the past six months, and the economy looks like it’s headed toward a soft landing in the U.S. and globally.”

Payroll employment has showed some slowdown in recent months.  For example, in the .October/November/December period of 2022 employment rose on average 284 thousand per month.  In the 3-month period ending in December of this past year the gain has slipped to 165 thousand.  Some of the slowdown undoubtedly reflects reduced demand.  But also the labor market is still very tight and firms are finding it difficult to find qualified workers. .

Given the ADP report, we are looking for payroll employment to rise by 160 thousand in January  We will get that report from the BLS on Friday.  We also expect the unemployment rate to be unchanged at 3.7%.

Stephen Slifer


Charleston, SC