The ADP national employment report is compiled from a subset of ADP (Automatic Data Processing) records for employees working in the private sector.

The data are collected for pay periods that can be through to include the week of the 12th of each month, and it is processed with statistical methodologies similar to those used by the U.S. Bureau of Labor Statistics to compute employment from its monthly survey (the nonfarm payrolls).

ADP contracted with Macroeconomic Advisors design a monthly report that would ultimately help to predict monthly nonfarm payrolls. The ADP report only covers private (excluding government) payrolls at this time.

The ADP report is the closet designed report to help predict the monthly released nonfarm payroll by the BLS. This is why it is mainly looked at in the economy. Nevertheless, since the release of this index it contained huge discrepancies with the actual nonfarm payrolls and for that the report is still starving to gain acceptance in the market.

The release so far gains slight market reaction whether for the currencies or equities market for reasons mentioned above, yet it is starting to grow. The nonfarm payroll is considered the god father of all fundamentals as employment is the corner stone in all economies as it is the solid base from which expansion steams.

For that since the BLS employment report is of huge magnitude the more the ADP proves is at least closely accurate to be dependable in predicting the nonfarm payrolls the more it will attract market reaction. As we know the growth the labor force means the stronger the economy and more money is in hands of the public to spend demanding more goods and providing industries with the reason to expand production all helping to ensure a stronger GDP.    

Producer Price Index gauges the average change in prices received by domestic producers for their output at all stages of processing, as it tracks changes in prices to raw materials and semi-finished goods. The index is similar to the CPI in depicting changes in prices on the producer levels nevertheless it does not include services.

The index compares the change in prices for commodities to a base period, usually expressed in a percentage change. The index is broken down into components by commodity, industry sector, and stage of processing and each criterion considers the following:

• Commodity: organizes products by similarity of end use or material composition

• Industry: measures the average change in prices received for an industry’s output sold to another industry

• Stage of Processing: regroup commodities according to the class of buyer and the amount of physical processing or assembling the products have undergone
The reading is usually released as well on the Core level, which if we look at Core PPI is the change in prices excluding the volatile items, such as energy, the eliminations to those variables provide a more accurate look at the overall trend of inflation.

Some nations report the Producer Price Index divided into two readings, such as the United Kingdom, as they report Input Prices which is prices at factory gates which contains the change in prices of raw materials that undergo the manufacturing process, and Out Prices which is the change in prices factories reflect in their product.

From that stems the importance of this indicator as historically the correlation was seen between the change in prices on the producer level and the consumer level. Since they are similar in fashion the PPI anticipates a change on the CPI as eventually the rise in prices will reach to the final consumer.

Producer price index is a comprehensive index of wholesale price changes which indicates a future change in retail prices. PPI measures price change from the perspective of the seller. So in other words it is a measure of inflation. Any rise in prices from the producer's side will raise the prices throughout the channel to the final consumer.

In particular, the producer price indexes for all commodities foreshadow changes in the Consumer Price Index. An increase (or decrease) in these producer price indexes today are likely to be followed by a comparable increase (or decrease) in the Consumer Price Index.

Two things are taken into consideration when studying PPI; first, the price of purchasing the raw material for production and second, the demand of the final product. If the cost of purchasing raw materials goes up, then the price of the product itself will incline. Also, if the demand by the consumer increases, the price will inflate. Inclining demand will result to increased productivity which will require more labor. As seen before, more money in the hands of labor, leads to spending. This causes inflation and finally results to a rise in interest rates. The effect of this figure can be significant if the quarterly figures widely differ from the forecast and it will be a significant market mover.

The effect of a rise in this number will point to future hikes in key interest rates which drive the bond markets down and the combination of bond yields. Stocks and indices are also likely to be negatively affected as an increase in the PPI will point to higher interest rates which the stock market doesn't like to see…
 
For currencies the effect of high inflation can be uncertain, as from one side future interest rate hikes and modifications in the monetary policy is considered a strength to the currency; while at the same time high producer prices lower competitiveness in the overall markets.