ADP Employment, Nonfarm Payrolls Data Highly Correlated

Today's ADP employment report showed a decline of 23,000 private payrolls last month. With the monthly Nonfarm Payrolls [NFP] report due Friday, below we highlight a historical comparison of the two going back as far as ADP has data for.

As shown, the correlation between the two is 0.824 and the R squared value is 0.6793 (both pretty high numbers). Nonfarm Payrolls are currently expected to show an increase of 25,000 in February. Historically, there have been 4 times out of 28 where ADP was negative and NFP was positive.

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