NFP explained


What is the NFP? NFP stands for nonfarm payrolls and refers specifically to the monthly employment figures for the US.

The headline figure is the change in nonfarm employment from the previous month and is a key barometer of economic health.

It is a measure of the number of jobs created, excluding farm work, employment by private households, unincorporated self-employment, the military and some other government agencies.

When is the NFP released?


The US Bureau of Labor Statistics releases the nonfarm payrolls data on the first Friday of each month (with the odd exception) as part of its Employment Situation Report.

The report is released at 08:30 (ET), which is usually 13:30 UK time, or 14:30 European time, except on the rare occasions when daylight savings times are not in sync.

What data does the NFP contain?


The NFP report contains a wealth of information on the US labour market, including the headline number: Total nonfarm payroll employment.

Secondary but important data also in the report include the labour force participation (the proportion of working age adults in work or looking for work); average hourly earnings; the unemployment rate; and sectoral employment levels.

Earnings are often closely parsed for signs of an uptick in inflation as this is another important factor in the Fed’s assessment of monetary policy.

Which markets are impacted by NFP?


The NFP is seen by the markets as a crucial barometer of US economic health and therefore the future course of interest rates as set by the Fed. In simple terms a strong payroll number gives the Fed leeway to raise rates, while a weak number tends to support the case for more accommodative monetary policy.

Short-term interest expectations are important considerations for trading the US dollar, Treasury bonds, US stocks and other markets like gold and oil. 

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