Financial Event: The Nonfarm Payrolls Report

The most important economic indicator for the US

The Non-Farm Payroll, or NFP in short, is a monthly report issued on the first Friday of every month by the U.S Bureau of Labor Statistics.

When is the next NFP Report?

The next NFP Report is on the 7th of May 2021

Why is the NFP important

The NFP Report specifies which sector - excluding agricultural, governmental and private households- has added more employees in comparison to other sectors. It also includes additional information such as average hourly earnings and wage increases.

An increase in jobs may be taken as a sign of inflationary pressures, which may lead to an interest rate hike. On the opposite, a fall in numbers may indicate a declining economy, increasing the chances of a rate cut.

The NFP is a reliable indicator of how the U.S Labor market is fairing and has the power to impact the Dollar and the Stock Market. During the announcement, we are expecting high volatility across USD pairs.

What to watch out for

Below we present a list of what to bear in mind:

• The percentage of the unemployment rate over the overall workforce - It can influence how the Federal Reserve assesses the US economy.
• Which sectors show fluctuations in job demand and supply – Gives traders information on specific sectors of the economy which can help in planning better informed and more precise trades
• The Average Hourly Earnings – If there is a decrease in this number but the number of jobs remains the same then it affects the economy the same way as when people have been subtracted from the workforce
• Revisions to previous NFP releases – An important component that has the power to spark high and sudden volatility in market movement due to traders re-pricing their growth expectations based on these revisions.

A higher than expected reading should be seen as positive/bullish for the USD, while a lower than expected reading should be seen as negative/bearish for the USD.

WHAT IS A NONFARM PAYROLLS FORECAST?

A NonFarm Payrolls Forecast tries to predict the result of the NFP monthly report and the impact these results can have on the markets by using important economic indicators to understand the outlook like Unemployment Rate, Labor Force Participation Rate and Average Hourly Earnings.

The National Employment Report (ADP) estimates nonfarm employment based on surveying thousands of private businesses. The main difference between the ADP and NFP is the sample size and the methodology of study. ADP reports can show anticipations of NFP trends. NFP Outlooks using ADP are based on Jobs Report, historic data and other related indicators such as Initial and Continuing Jobless claims.

NFP Calendar

The data release is usually on the first Friday of every month at 13:30 CET