WHAT: ADP Employer Services report for January

WHEN: Wednesday, February 2, at 8:15 a.m. EST

December's gain of 297,000 in U.S. private payrolls reported by ADP was the most robust number on record, with data going back to 2000, according to Macroeconomic Advisers LLC, which jointly develops the report with ADP.

But that figure was in sharp contrast to the 113,000 private-sector job gain for the month reported by the U.S. Labor Department two days later, which cast more doubt on the reliability of ADP as a predictor of payrolls.

Even though most U.S. indicators lately have suggested the economy is picking up steam, job creation has been slow since the end of the recession in June 2009.

Analysts have closely watched data on private payrolls, which tend to show the bulk of new job gains.

But ADP's data has often been at odds with the government's report, making economists nervous about using the it to fine tune their expectations for the Labor Department report.

The caution persists even as a number of other reports have indicated a pickup in employment.

An employment component in Tuesday's Institute for Supply Management's manufacturing survey reached its highest level since April 1973.

For January, payrolls could be distorted to the downside because of the recent winter storms, at least one analyst said.

I think this month is going to be particularly treacherous because of the storms. Historically, when the survey week coincides with really bad weather, it tends to depress the estimate of payroll employment, said Charles Lieberman, chief investment officer of Advisors Capital Management, LLC in Hasbrouck Heights, New Jersey.

He said jobs numbers might be down if temporary or hourly jobs, for instance, were affected by the storms.

My guess is we'll get a better sense of what's going on with the February data. It'll likely be a catch-up in February from an artificially depressed January, Lieberman said.


A stronger-than-expected ADP report would likely be supportive for U.S. stocks and the dollar. That would add to gains in stocks, with the Dow <.DJI> and Standard & Poor's 500 <.SPX> closing at their highest levels since summer 2008 on Tuesday, buoyed by the ISM report.

U.S. Treasury prices could decline if ADP shows more job gains than expected, as it would add to unease about potential inflation.

The Federal Reserve has had a cautious outlook on the economy, given the nation's high unemployment rate of 9.4 percent.

(Reporting by Caroline Valetkevitch; Editing by Leslie Adler)