Non-Farm Payrolls (NFP)
|Release Date:||Usually on the first Friday of the new month following the month under review|
|Release Time:||At 9.30am US Eastern Time|
|Released By:||The US Bureau of Labor Statistics|
The Non-Farm Payrolls report is actually a double report, released by the US Bureau of Labor Statistics as a measure of the change in the number of employed people during the previous month, excluding the agricultural industry. Simply put, it identifies the number of jobs that have been added or lost in the US in all sectors except agriculture, and also indicates the percentage of employable but unemployed individuals in the US.
The report has two components: the Non-Farm Employment Change and the Unemployment Rate. If there is any news item that is watched by traders globally and has one of the heftiest market impacts, the NFP is one such forex news release.
Time of Release
The Non-Farm Payrolls report is released monthly, usually on the first Friday of the new month following the month under review. The time of release is 9.30am US Eastern Time. The data is released on this webpage of the US Bureau of Labor Statistics and also on independent news feeds from Bloomberg and Thomas Reuters.
Interpreting the Data
This report has one of the highest market impacts of all news releases in the economic news calendar for several reasons. It is released very early in the month, and as the largest consumer of raw materials and finished imported goods from several countries such as China and Japan, the US employment situation has a very direct bearing on the performance of the global economy. The NFP affects so many other economic indicators such as manufacturing, consumer confidence and spending, retail sales, GDP, inflation, trade balance, etc.
Trading the NFP is very tricky. The two components of the news release must work in agreement to produce a definable market response.
If Non-Farm Employment Change is lower than expected and the Unemployment Rate is higher than expected, this is a result in agreement and is seen as USD negative, since the unemployment rate is likely to rise when lesser number of jobs are added.
In the same vein, when more jobs are added than expected, it means more people are being taken off the labor market, and when the Unemployment rate reflects this, then this is seen as USD positive.
The preferred currency pair of trade is the USDJPY, because the US is the largest trade partner of Japan, and largest consumer of goods made in Japan’s export oriented economy.
The NFP has a wide range of affectation, moving prices in the stock and commodity markets in addition to the forex market. This is a complex news release which requires experience to trade and therefore should not be traded by beginners.