ADP data casts a bearish tone to the morning -- will it last?

Posted Dec 2nd 2009 10:00AM by Mark Fightmaster
Filed under: Employees, Economic Data

Some analysts may tell you that the market could "care less" about the ADP report (scroll down to the fifth paragraph to see CRT Capital Group's comments), but Treasurys are a bit lower thanks to the latest report, and the markets didn't get the boost they needed and remained near flat territory.

The data show that 169,000 jobs were cut in November -- the fewest cut since July 2008. In addition, October's data of 203,000 jobs lost were revised down to 195,000. Still, November's decline marks a 22nd straight month in which private-sector jobs were lost. The ADP noted that while "overall economic activity is stabilizing, employment usually trails economic activity, so it is likely to decline for at least a few more months."

On Friday, the Bureau of Labor Statistics will release its estimate for November nonfarm payrolls. Currently, analysts believe roughly 100,000 jobs were lost in November, which would be the smallest decline since last January. The problem is that the ADP data, which does not include government jobs, indicates that we can expect a 180,000 decline in payrolls.

Does this suggest that there is going to be a bit of an early December swoon in the markets triggered by jobs data? Well, if you go by CRT Capital's assertion, the answer is no. Of course, 80,000 more jobs lost than expected could trigger a bit of a sell off on Friday.

Thus far today, the market is slightly higher, but let's see what happens between today's trading session and Friday. Is it possible that this data is ignored? Yes. Is it possible that this data could come to fruition in the shape of a much larger-than-expected drop in jobs on Friday, triggering a sell off? Yes. Perhaps alone this news will not be enough to trigger a sell off, but there could always be a conflagration of news that could push stocks lower. Guess it is time to play wait and see until Friday.

Tags: ADP, featured, jobless, jobs, umemployment, unemployment

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Reader Comments (Page 1 of 1)

12-02-2009 @ 10:33AM

John Mylant said...

"Thus far today, the market is slightly higher, but let's see what happens between today's trading session and Friday. Is it possible that this data is ignored? Yes. Is it possible that this data could come to fruition in the shape of a much larger-than-expected drop in jobs on Friday, triggering a sell off? Yes."

--- Good research here! Well see Friday

That 43.8-44.0 area is pretty hard for ADP to get through. Three times in Nov it has bounced back from that resistance level. If it get's through there, I see it going to 46+ but it has to break through there first!

John Mylant
http://mylantsmoneyblog.typepad.com/