The ADP data has diverged with the NFP many times in the past. We’ve seen countless times the market moving on the ADP data just to get caught on the wrong side by the NFP report a couple of days later. You can see it better in the two pictures below (h/t @stevehou0 on X) showing the trend in NFP and ADP before and after revisions.
We can see that although the two are not perfectly correlated, the ADP has been more accurate in capturing the trend. In 2025, the labour market froze due to the tariffs mess of course, and the uptrend seen in the last part of 2024 turned into a downtrend due to uncertainty and growth fears.
That trend might turn around again given that the uncertainty from tariffs is now behind us and expectations for rate cuts could improve business activity.
Fed’s Waller on ADP
Another interesting fact is that Fed’s Waller yesterday mentioned the ADP data in his speech. Below you can read the excerpt:
I also look at timely data that Federal Reserve staff maintains in
collaboration with the employment services firm ADP to construct a
measure of weekly payroll employment, which covers about 20 percent of
the nation’s private workforce. This measure is comparable to the one
ADP publishes. The current May–July contour for the staff measure of
ADP-based private employment is broadly consistent with that of the
Current Employment Statistics numbers. And in the weeks after the July
jobs report’s reference period, preliminary estimates from ADP show
continued deterioration.
He said that the weekly payroll employment data that they construct from ADP continued to show deterioration after the July’s jobs report’s reference period.
To sum up
The ADP report next week might be the most important of the year as market participants will certainly pay even more attention to it after the latest findings. This might translate into big moves across the markets as traders position into the NFP report coming up the day after
