ADP reports have signaled January’s job creation to be the strongest in 5 months. A whopping 291,000 private sector jobs were added last month, far exceeding the already solid estimate of 150,000.
One of the most notable features of this report is that job creation came from all sectors, with leisure & hospitality leading the way at 96,000 new jobs. Analysts point to the mild winter as a possible cause for the unexpected gains.
Consensus expectations for Friday’s report are currently at 158,000 with a range of 145,000 to 200,000. A range this wide indicates analysts are bullish on employment prospects but unsure as to the degree we will see on tomorrow’s report. They also anticipate a drop in the unemployment rate which is already at historic lows.
With all of the other headlines out there, it will be interesting to see what impact this report has on markets. Investors may shift their attention to the US if the employment number is as strong as the ADP suggests, at least temporarily as the US continues its slow and steady growth.
Overall, the US may still be the best place to deploy capital given the steady growth we have seen over the past few years. The growth rate may not be what it once was, but continued strength in the labor market suggests the economy is in a good place to foster sustained growth.
As always, the potential exists for a report to be a surprise to the system. It is imperative to have stops working if one plans on trading during news events as the market reactions can be volatile with large swings in magnitude.
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