INDICATOR: July ADP Employment Estimate/Conference Board Help Wanted Online Index

KEY DATA: ADP: 163,000; Small: 73,000; Medium: 67,000; Large: 23,000/HWOL: -153,000

IN A NUTSHELL: “Unless you believe that the firms that service payrolls are clueless about their customer base, the consistently moderate job-growth estimates for private-sector companies point to better employment numbers coming out of the government.”

WHAT IT MEANS: Employment Friday is two days away so today is when private-sector company estimates of job growth take center stage. ADP is the pre-eminent firm using its client data to estimate national-payroll changes but it has been totally wrong during the April-through-June period.

The payroll-servicing firm has seen job gains in the 140,000 range while the government has it closer to 75,000. Once again, ADP’s clients are generating decent additions to payrolls in July. The increases were, as usual, mostly in small- and medium-size firms.

But on a positive note, even the larger firms have started to pull their weight. Manufacturing gains seem to be picking up as well. Separately, the Conference Board reported that its index of online help-wanted ads fell in July after a large increase in June. That would seem to point to job gains slowing in the future.

These data are hugely volatile, though, so we shouldn’t jump to conclusions just yet. Still, as firms are becoming so much more dependent upon the Internet to advertise and reach potential employees, this report has to be watched carefully. Just don’t take one month’s data as being indicative of what is happening in the economy.

MARKETS AND FED POLICY IMPLICATIONS: The ADP report suggests that Friday’s jobs report will be higher than the consensus and well above the average increases over the past three months.

If you use the unemployment-claims data as an indicator, we should be seeing payroll increases in the 150,000 range. So maybe we will get a positive surprise. As has been the case recently, I am above consensus, coming in around where the ADP number is, so maybe my thoughts are biased by my forecast. We shall see.

The Federal Reserve is ending its two-day meeting and the Federal Open Market Committee (FOMC) does not have the employment report for its deliberations. There really is no reason for the committee to take any additional action such as a third round of quantitative easing, or QE3, as growth may be soft but not weak enough for the central bank to use up one its few remaining bullets.

A better than expected number would give the members some breathing room so they can do what they should do, which is watch and wait.