ADP National Employment Report Definition, What It Covers

What Is the ADP National Employment Report?

The ADP National Employment Report is a monthly report of economic data that tracks the level of nonfarm private employment in the U.S. It is published by Automatic Data Processing. The ADP National Employment Report is also known as the ADP Jobs Report or the ADP Employment Report.

Understanding the ADP National Employment Report

If you're not self-employed or a government employee, there is a decent chance that your pay statement is processed by Automatic Data Processing Inc. (ADP). The firm handles payroll for about a fifth of U.S. private employment, putting it in a unique position to survey trends in the nation’s labor market.

ADP collects data through the payroll services and benefits administration it provides to companies. It issues reports on its findings through a partnership with Stanford Digital Economy Lab.

The ADP National Employment Report is released two days prior to the Bureau of Labor Statistics' employment situation report, which is available on the first Friday of each month. Investors and economists see the ADP report as a preview of the more detailed and comprehensive government data release.

Details of the ADP National Employment Report

The methodology of the ADP National Employment Report is managed by Stanford Digital Economy Lab. The report is divided into three sections, using figures that are seasonally adjusted. Each section provides the following information:

1. A national snapshot showing the change in the number of company payrolls, and also breaks that change down according to business size and sector.
2. Size of Business: Breaks down the change in payrolls by size (small, medium and large) and broad sector (goods-providing or services-providing).
3. Regional assessment of employment trends, highlighting changes in nine regions.

Example of the ADP National Employment Report

In March 2024, private-sector employment increased by 184,000. That figure represented a strong increase in hiring since July 2023.

In the aftermath of severe economic damage—the result of government restrictions on social distancing and keeping businesses open—Moody’s said the findings showed that the labor market was showing strong growth. Payrolls were up by six million from the beginning of the year but four million short of pre-pandemic levels.

Special Considerations

The number of people that are employed can tell us a lot about the state of the economy. Total employment and the rate of unemployment are used to determine when the economy is in a recession. The chart below illustrates the monthly changes in nonfarm private employment data since 2002. As you can see, the COVID-19 pandemic coincided with a dramatic rise in unemployment.

A population that is fully employed and where many people are earning steady paychecks is synonymous with a strong economy. More real goods and services are being produced and, in turn, people are earning the income to buy them. More money is circulating, which triggers an increase in demand for goods and services, plus more job opportunities for people to help manufacture and sell them.

Eventually, demand for labor can outstrip supply. When this occurs, employees have greater bargaining power and can demand better wages, which can lead to falling corporate profits, higher inflation, and pressure to raise interest rates.