The Complete Guide to Non-Farm Payrolls (NFP)

The release of nonfarm payroll data is important for both economic policy and financial markets. Learn what nonfarm payrolls are, the upcoming 2021 NFP dates, and how to trade them.

What are the Non-Farm Payrolls?

Non-Farm Payrolls (NFP) are monthly measures of the number of workers in the U.S., excluding farm workers and some other types of employment such as government employees, private households, and nonprofit employees.

The data are collected monthly by the Bureau of Labour Statistics (BLS) and included in the Employment Situation report, which also includes the unemployment rate. The report is released on the first Friday of each month at approximately 8:30 a.m. EST – equivalent to 1:30 p.m. GMT.

In each report, the previous month’s data is analyzed based on two surveys:

The Household Survey – which provides details on employment demographics, including unemployment rates by gender, race, education level and age. The establishment survey – it provides the total number of new nonfarm jobs in the economy. This part of the data is usually referred to as the NFP. It provides details on the number of new jobs created by industry, hours worked, and average hourly earnings.

Understanding NFP publications

NFP releases and unemployment rates are used by economists and policymakers to assess the state of the U.S. economy and provide a preview of future economic activity. There are a few areas that traders should pay particular attention to:

Unemployment rates: This is the most closely watched number, as it has the greatest impact on the Federal Reserve’s assessment of economic health, Sectoral growth: the report shows which sectors are expanding and creating jobs and which are contracting, contributing to unemployment. This can give an indication of which stocks, indexes and ETFs may rise or fall in the future

Hourly Earnings: wage increases and decreases are another area of the report to pay attention to – as wage increases are a sign of a healthy economy, while wage decreases indicate declining wealth and consumer spending. This could have a domino effect on corporate revenues, Revisions to the previous NFP report: any change in previous growth expectations can lead to market movements as traders reassess their current positions

How do U.S. nonfarm payrolls affect currency markets?

The monthly Non-Farm Payrolls (NFP) report has a significant impact on foreign exchange markets as it is used by traders as a leading indicator of economic growth, along with inflation, gross domestic product (GDP), and the monthly payroll report.

If the NFP report shows a healthy U.S. economy with high employment, job growth and wage gains, this should attract investment from around the world. This could drive up the U.S. dollar exchange rate and influence major currency pairs.

How do the U.S. non-farm payrolls affect other markets?

Non-farm payrolls reports provide insight into how the labor force will affect the economy, which in turn will impact the stock market and the price of commodities – especially gold and silver.

When the NFP presents strong employment numbers, it is a sign that companies in all industries are doing well, which can lead to more optimism in company stocks. However, since positive data also leads to a strong dollar, this can have a negative impact on U.S. indices such as the Dow Jones and the S&P 500, which tend to have a negative correlation with a stronger dollar.

How to Trade Non-Farm Payrolls and NFP Press Releases

  1. Open a trading account
  2. Research analysts’ forecasts for the NFP numbers
  3. Select an asset to trade and enter your trade
  4. Monitor the market before and after the NFP release
  5. Adjust positions and close them when needed

The volatility created by the NFP provides traders with profit opportunities, but it also comes with risks. Therefore, it is important that you have a risk management strategy before you trade.


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