Negative ADP Employment Result: Will It Affect NFP Negatively Also?
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Author: – Mr. Amar – Technical Analyst

It was a bit of shock during last Wednesday’s ADP Employment data released when about 301K lower in January. Of course, we should note that ADP has lost its reputation for being able to predict where the NFP will come out.

However, it can still influence expectations. Generally, the sudden loss in jobs was due to omicron and the reimposition of measures in certain areas. The uncertainty of the severity of the variant could have kept employers from hiring. But, also, there is a seasonal roll-over of contracts at the end of the year, which could also have influenced the result.

Chartists are still expecting NFP to remain positive. But the median of surveyed economists shows an expectation of 150,000 jobs to have been added in January and wages to rise 0.5% m/m, it’s still critical to recalibrate the expectations.

As a reminder, the state of the US labor market remains more uncertain and volatile than usual as it emerges from the unprecedented disruption of the COVID pandemic. That said, weighing the data and our internal models, the leading indicators point to a slightly below-expectation reading in this month’s NFP report, with headline job growth potentially coming in.

Potentially, traders could refine their analytical skills in the preparation for NFP by focusing on the data release later tonight. Below are some insights of what could be look out for;