US non-farm payroll (NFP)

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    Non farm payrollThe non-farm payroll is a report published every month by the United States Department of Labor.

    The report records the monthly change in the number of people in the US who are employed, their average hourly and weekly earnings, their average working hours and changes in the unemployment rate. It specifically covers companies involved in construction and manufacturing, either for heavy industry or the consumer goods markets.

    As the farming industry skews the employment rate due to the seasonal fluctuations in employment throughout the year, the statistics for the farming industry are left out; hence the name of the report. The numbers are released in the Employment Situation Report every month.

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    How the non-farm payroll affects trading

    The reports are traditionally released every first Friday of the month and have a significant impact on the forex markets. The non-farm payroll report produces the most significant volatility of all the economic reports released.

    The NFP is one of the most important indicators for the current status of the US economy. An increase in employment indicates that businesses are hiring and expanding, which has further effects, as it means there are more consumers in the economy who have a disposable income to spend. Consumer spending accounts for almost 70% of the US economy and so this report has such a substantial effect on the forex market.

    The stock market is also affected by the non-farm payroll report because the report shows the increase or decrease in employment by sector and so equities traders look for strengthening sectors. The US dollar and the bond market are also affected.

    For more information, visit the US Bureau of Labor’s website. You can check the NFP expectations and data in real-time with an economic calendar.

    Further reading

    To learn more about how economic reports can impact the markets, visit: