Non-Farm Payrolls (NFP), focus on the number of new jobs created in a singular month in the job market excluding the agricultural sector.
The major reason that the agricultural sector is excluded comes down to seasonal employment, during certain times of the year there might be a higher number of employment happening in the agricultural sector due to harvest or planting season. To get a more consistent and true representation of the number of new jobs created, looking at the NFP figures it gives you a good indication of the growth of the employment sector.
Why exclude agriculture?
Seasonal employment in farming can cause fluctuations in employment numbers. Therefore, looking at NFP figures provides a more accurate representation of the job market's growth. But NFP isn't the only number to watch. It is typically released with the Average Hourly Earnings and Unemployment rate.
Average Hourly Earnings measure monthly wage increases for the working population, while the Unemployment rate indicates the percentage of people actively seeking employment. The lower the unemployment rate, the stronger the labour force.
When is NFP released?
Typically, the first Friday of every month is when you can expect this economic report. However, it may vary if there are important press releases. Make sure to mark your calendar!
How do you interpret the data?
Higher than-forecasted NFP figures suggest greater dollar strength, while lower-than-expected NFP figures could indicate dollar weakness. By tracking the Average Hourly Earnings and Unemployment rate, you can gain a deeper understanding of the job market's overall health.
Higher than forecast would suggest that there should be greater Dollar strength coming into the market, while lower-than-expected NFP figures should suggest that there should be more dollar weakness coming into the market upon data being released.
Average Hourly Earnings:
Average Hourly Earnings is a measure of how much wages have increased on a month-to-month basis over the working population. Simply translated to how much employers are paying more for monthly wages.
Unemployment figures take into account the official employment rate which is the percentage of people actively seeing employment. The lower the unemployment figures the stronger the labour force and the higher the unemployment figure the weaker the labour force.
Are you curious about Non-Farm Payrolls (NFP)?
As a trader, understanding this economic indicator is crucial to anticipating market movements. NFP measures the number of new jobs created in the job market, excluding the agricultural sector.
Conclusion on NFP
In summary, monitoring figures is crucial for traders to make informed decisions. By understanding how NFP is calculated and its relationship with other labour figures, traders can better predict market movements and adjust their strategies accordingly. Register with TD Markets today and get ready for this high-impact event.