US Employment Report and Nonfarm Payrolls

The US Bureau of Labour Statistics (BLS) releases the Employment Situation Summary, which is known among traders and analysts as the employment or jobs report. The jobs report is released at 8:30 a.m. ET on the first Friday of every month. The report provides a range of metrics for the employment market including the US unemployment rate, the monthly change in nonfarm payrolls (NFP), as well as average earnings and hours worked. It basically offers an estimation of all the people who are on payrolls in the US economy, their hourly earnings, the hours they have worked during the week on average, along with different versions of the unemployment rate.

US Bureau of Labour Statistics

The US Bureau of Labour Statistics is a US agency under the Department of Labour. It is responsible for evaluating activity in the job market, working conditions, and price changes, as well as delivering accurate information and services. Two of the main economic releases that the Bureau is responsible for are the monthly Nonfarm Payroll report and the Consumer Price Index. The first is one of the most-watched economic releases and provides information about the condition of the US job sector. The latter measures the country’s inflation, and together both reports are closely watched by the Federal Reserve for clues about the economy, influencing the central bank’s monetary policy decisions.

The employment report

This report is one of the most important and highly anticipated economic releases, closely watched by investors and analysts. It tends to create volatility and is one of the key data used by the Federal Reserve to assess the health of the economy and set monetary policy. It is released on the first Friday of every month for the preceding month and provides investors with an overall view of the economy.

As mentioned, the report provides an estimation of how many people are on payroll in the US. economy, the average number of hours they worked each week, and their average hourly earnings, together with various versions of the unemployment rate. The report is based on information gathered from household and employer surveys.

Many investment companies provide their own estimations ahead of the report for the nonfarm payrolls, the unemployment rate, hours worked and hourly earnings.

Household and Establishment surveys

The report consists of two surveys which provide valuable information. The first is the household survey which is used to calculate the unemployment rate, and the second is the establishment survey which offers data on how many people are on payrolls, the hours they have worked, and their earnings.

Data on earnings can help evaluate labour costs, while labour demand can be determined based on the number of hours worked. The household survey can reveal which social groups bear the biggest burden of unemployment.

• Establishment survey

Also known as the Current Employment Statistics Survey, the Establishment Survey includes data that was collected from around 122,000 nonfarm businesses and government agencies and about one-third of all payroll workers. The survey is based on the weekly pay period that includes the 12th day of the month.

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.

The nonfarm payrolls don’t include farm workers because of the sector’s seasonal nature, dependence on self-employment, unpaid family work, undocumented workers, and its partial exclusion from unemployment insurance requirements. Self-employed workers aren’t included in the payroll data either.

• 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.

The survey is used to calculate the unemployment rate, which is measured as a percentage of the unemployed seeking work relative to the labour force, or the sum of the employed and the unemployed.

The report also provides alternative measures of unemployment and underemployment. There are rates representing those who are discouraged workers who have stopped looking for a job or those who are working part-time but would like a full-time job and rates for job losses during the month, and those unemployed 15 weeks or longer.

The household survey is more comprehensive than the establishment survey as its scope is wider and 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 Nonfarm Payrolls is released by the US Bureau of Labour Statistics and presents the number of new jobs created during the previous month in all non-farm businesses. The release of the monthly changes in payrolls can create volatility as it is closely watched by the Fed and is used by them to develop and adjust their monetary policy decisions.

A high number is considered bullish for the USD, while a low number is considered bearish. The NFP is not taken into consideration independently but is also viewed in conjunction with the previous months’ reviews as well as other data such as the unemployment rate and the market’s reaction to all of them.

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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Esta informação não deverá ser considerada como aconselhamento ou recomendação ao investimento, mas apenas como comunicação de marketing.