On Wednesday, the latest private payrolls report from ADP showed employers added 212,000 jobs in February.
But ahead of Friday’s big jobs report, this report might not be telling us much of anything.
Ian Shepherdson, economist at Pantheon Macroeconomics, said the ADP report is simply not a reliable leading indicator.
In a note following Wednesday’s report, Shepherdson wrote:
The ADP number is generated by a model which includes lagged official data and the Philly Fed’s ADS Business Conditions index, as well as data from companies using ADP for payroll processing. It is not a pure survey number comparable to the official data. Calling themselves a “Research Institute” doesn’t make their number a valid leading indicator.
Notably, the big news out of the report was the revision to ADP’s January report, which showed private employers added 250,000 jobs in the first month of this year, up from an initial report of 219,000 job adds.
The official January jobs report from the BLS showed that nonfarm payrolls grew by 257,000.
Shepherdson is forecasting nonfarm payroll growth of 220,000 for Friday’s report.
In a report in February, The Wall Street Journal declared Shepherdson the most accurate economic forecaster in 2014.
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