US Employment Report and Nonfarm Payrolls

The US Bureau of Labor Statistics releases the Employment Situation Summary, which traders and analysts commonly call the employment or jobs report. The BLS publishes this report at 8:30 a.m. ET on the first Friday of every month. It provides several key metrics about the labor market, including the US unemployment rate, the monthly change in nonfarm payrolls, and average earnings and hours worked. The Employment report essentially estimates how many people are on payrolls in the US economy, how much they earn per hour, and how many hours they work on average each week. It also includes several measures of unemployment.

US Bureau of Labour Statistics

The US Bureau of Labor Statistics is a federal agency under the Department of Labor. It evaluates job-market activity, working conditions and price changes, and it provides accurate data and services. The Bureau issues two major economic releases: the monthly Nonfarm Payroll report and the Consumer Price Index. The NFP report is one of the most closely watched indicators because it shows the health of the US job sector. The CPI measures inflation in the country. Together, these reports guide the Federal Reserve as it assesses the economy and makes monetary policy decisions.

The employment report

Investors and analysts closely watch this report because it is one of the most important and highly anticipated economic releases. It often creates volatility in the markets and serves as a key data point for the Federal Reserve when assessing economic health and setting monetary policy. The BLS releases the report on the first Friday of every month for the previous month. It gives investors a broad overview of the economy.

As mentioned earlier, the report estimates how many people are on payrolls in the US economy. It also shows the average number of hours they work each week, their average hourly earnings, and several versions of the unemployment rate. The BLS creates the report using data collected from household and employer surveys.

Many investment firms publish their own estimates for nonfarm payrolls, the unemployment rate, hours worked and hourly earnings before the report comes out.

Household & Establishment Surveys

The report includes two surveys that provide valuable information. The first is the household survey, which calculates the unemployment rate. The second is the establishment survey, which shows how many people are on payrolls, how many hours they worked and how much they earned.

Earnings data helps analysts evaluate labor costs. The number of hours worked also shows how strong labor demand is. The household survey reveals which social groups carry the heaviest burden of unemployment.

Establishment survey

The Establishment Survey, also known as the Current Employment Statistics Survey, gathers data from about 122,000 nonfarm businesses and government agencies. It represents roughly one-third of all payroll workers. The survey uses the weekly pay period that includes the 12th day of the month as its reference point.

When estimating the total US nonfarm payrolls, they consider anyone on the payroll of a surveyed business during that specific week, including part-time workers and those on paid leave.

Nonfarm payrolls exclude farm workers because the sector is highly seasonal, relies heavily on self-employment and unpaid family work, includes many undocumented workers, and is only partly covered by unemployment insurance. The payroll data also excludes self-employed workers.

Household Survey

The household survey is based on interviews of 60,000 households conducted monthly by the US Census Bureau. Those participating in the survey provide information about their employment status during the week including the 12th day of the month.

Analysts use the survey to calculate the unemployment rate. They measure it as the percentage of unemployed people who are seeking work relative to the labor force, which includes both the employed and the unemployed.

The report also offers several alternative measures of unemployment and underemployment. These include rates for discouraged workers who stopped looking for a job and rates for people working part-time who want full-time work. It also tracks monthly job losses and the number of people who have been unemployed for 15 weeks or longer.

The household survey covers a wider range of workers than the establishment survey. It includes the self-employed, household employees, farm workers and unpaid family workers.

Employment Report significance

Employment is at the heart of the US economy and the monthly jobs report is the most complete employment and economic indicator.

All attention falls on the unemployment rate and the change in nonfarm payrolls. Overall, the jobs report is a crucial indicator of the US economy and investors, traders and analysts pay careful attention to it as it offers a clear and precise assessment of the state of the US economy.

Non-Farm Payrolls and Why it Matters to Traders

The US Bureau of Labor Statistics releases the Nonfarm Payrolls report. It shows how many new jobs non-farm businesses created during the previous month. These monthly payroll figures often increase market volatility because the Federal Reserve follows this data closely and uses it to guide its monetary policy decisions.

A high NFP number usually strengthens the USD, while a low number typically weakens it. Traders never assess the NFP in isolation. They compare it with results from previous months and review other data, such as the unemployment rate and the market’s reaction to all of these indicators.

Nonfarm Payrolls tend to take markets by surprise and create significant volatility. If the numbers are higher than the consensus, then the USD tends to strengthen.

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