Why the Non Farm Payroll Report Matters

The Non-farm payrolls (NFP) report is published by the U.S. bureau of Labor Statistics. The monthly report includes the total number of workers (excluding certain industries) that are added to the U.S. economy on a monthly basis. It is published the first Friday of the month (except when that day happens to be the first of the month) at 8:30am Eastern Standard Time.

The NFP is the biggest report in forex. When the Bureau of Labor Statistics releases the number of jobs created and the current unemployment rate, investors react instantaneously to the information. A rise in jobs and lower unemployment should boost the demand for the US dollar versus other currencies. Viceversa lower than forecasted job creation and a rise in the unemployment rate would reduce the demand for the US dollar which would see it lower in value versus other currencies.

The NFP includes the employees of durable goods, construction and manufacturing companies while excluding farm workers, private household employees and non-profit organizations. This indicator can give an important insight on the overall strength of the US economy. It is even more important after in December of 2012 the Federal Reserve set a target of 6.5% unemployment to signal economic recovery. The US central bank would then start cutting back on the $85 billion a month bond buy-back program. The current rate in the US is 7.3%.

Given the statements from the Fed the NFP report will be closely watched by market participants from all major markets as it can have the power to impact the fundamental drivers of the US economy.

Next Release:
The Employment Situation for October 2013 is scheduled to be released on Friday, November 8, 2013, at 8:30 A.M. Eastern Time.

For more information
Bureau of Labor Statistics

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza