Non Farm Payrolls
When trading we use many indicators, events, statistics and announcements to analyse the state of the markets and their likely movements.
One of these events with high importance is the monthly announcement of Non Farm Payrolls.
What is the Non Farm Payroll Report?
Non Farm Payroll (NFP) report is researched, recorded and reported by the U.S. Bureau of Labor Statistics. The report is released on the first Friday of each month and gives us the total number of paid workers in the USA excluding farm employees, private household employees, general government employees and employees of non profit organisations that provide assistance to individuals.
The report is used to help government policy makers and economists determine the current state of the US economy and predict future levels of economic activity. The figure released is the change in the NFP from the previous month that shows the number of jobs gained or lost. The report includes figures on the average work week and the average weekly earnings of all non-farm employees.
The main financial assets affected by NFP are the US Dollar and Gold. If you trade either or both you should be aware of when the announcement will be made, what the forecast is and what the actual is. Details can be found on an Economic Calendar.
Why is Non Farm Payroll so important?
Job creation is the foremost indicator of consumer spending, which accounts for the majority of economic activity, so you can see just how important this report is as an economic indicator.
A higher than expected reading should be taken as positive/bullish for the USD and Gold, while a lower than expected reading should be taken as negative/bearish for the USD and Gold.
Asset prices (USD & Gold) may fluctuate wildly when NFP is announced so caution for the novice trader is advised. However, these conditions may prove very profitable for a trader that knows how interpret these swings and take advantage of them.