Loading the player...
A:

Traders are constantly monitoring various economic indicators to identify trends in economic growth. Some of the most watched economic indicators include the Consumer Price Index, housing starts, gross domestic product and the employment report. Out of these indicators, the employment report contains a variety of data and statistics regarding the employment information of the market.

The employment report is released on the first Friday of every month by the Bureau of Labor Statistics, providing data covering the previous month. The report contains information on unemployment, job growth and payroll data, among other stats.

Out of the payroll data that is provided, the most important statistic that is analyzed is the non-farm payroll data, which represents the total number of paid U.S. workers of any business, excluding general government employees, private household employees, employees of nonprofit organizations that provide assistance to individuals, and farm employees. This data is analyzed closely because of its importance in identifying the rate of economic growth and inflation.

As with other indicators, the difference between the actual non-farm data and expected figures will determine the overall effect of the data on the market. If the non-farm payroll is expanding, this is a good indication that the economy is growing, and vice versa. However, if increases in non-farm payroll occur at a fast rate, this may lead to an increase in inflation. In forex, the level of actual non-farm payroll compared to payroll estimates is taken very seriously. If the actual data comes in lower than economists' estimates, forex traders will usually sell U.S. dollars in anticipation of a weakening currency. The opposite is true when the data is higher than economists' expectations.

To learn more, see Trading On News Releases, A Guide To Conference Board Indicators and Economic Indicators To Know.

RELATED FAQS
  1. What are the most common market indicators to follow the U.S stock market and economy?

    Understand some of the key indicators analysts use to follow the U.S. stock markets and to assess the overall condition of ... Read Answer >>
  2. What does the Bureau of Labor Statistics do?

    By collecting, analyzing and reporting on important economic data, the Bureau of Labor Statistics has become a critical information ... Read Answer >>
  3. What data does the Bureau of Labor Statistics collect?

    Collected data includes unemployment numbers, inflation, prices, pay and benefits, time use of Americans, import/export numbers ... Read Answer >>
  4. What is the difference between market indicators and economic indicators?

    Read about the differences between technical market indicators and general economic indicators, and learn how traders and ... Read Answer >>
  5. Is the Bureau of Labor Statistics accurate?

    Read this brief analysis of the accuracy of Bureau of Labor Statistics, including a summary of the types of reports issued ... Read Answer >>
  6. How does the Bureau of Labor Statistics determine the Consumer Price Index (CPI)?

    Changes in the average price level of more than 200 goods and services across the U.S. economy are used to determine the ... Read Answer >>
Related Articles
  1. Trading

    Forex: Trading The U.S. Nonfarm Payroll Report

    The U.S. nonfarm payrolls will always serve as an important piece of news for the currency investor and trader.
  2. Trading

    5 Reports That Affect The U.S. Dollar

    These five reports provide short- and long-term insight into the valuation of the U.S. dollar.
  3. Investing

    CPI, Beige Book and Other Economic Indicators That Do-It-Yourself Investors Should Know

    Understanding these investing tools will put the market in your hands.
  4. Trading

    4 Key Indicators That Move The Markets

    Find out what reports to watch in order to anticipate and react to market movements.
  5. Insights

    What You Need To Know About The Employment Report

    This widely watched indicator of economic well-being directly influences the market.
  6. Insights

    How The Bureau Of Labor Statistics Works

    The Bureau of Labor Statistics (BLS) is the primary statistical agency for the U.S. federal government in labor economics and statistics.
  7. Personal Finance

    America’s Labor Market: Hidden Distortions and Uncertain Forecasts

    Employment reports released by the Bureau of Labor Statistics have a profound impact on political, business, consumer, and investor behavior.
  8. Trading

    Trading Around Key Options Indicators

    Learn the key economic indicators to help predict market movement.
  9. Investing

    Leading Economic Indicators Predict Market Trends

    Leading indicators help investors to predict and react to where the market is headed.
RELATED TERMS
  1. Nonfarm Payroll

    Nonfarm payroll refers to any job outside of farms, private households ...
  2. Employment Situation Report

    A monthly report compiling a set of surveys in an attempt to ...
  3. Payroll Tax

    Tax an employer withholds and/or pays on behalf of their employees ...
  4. Economic Indicator

    An economic indicator is a piece of economic data, usually of ...
  5. Payroll Card

    A prepaid card onto which an employer loads an employee’s wages ...
  6. Economics

    A social science that studies how individuals, governments, firms ...
Hot Definitions
  1. Tender Offer

    An offer to purchase some or all of shareholders' shares in a corporation. The price offered is usually at a premium to the ...
  2. Ponzi Scheme

    A fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns ...
  3. Dow Jones Industrial Average - DJIA

    The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange ...
  4. Revolving Credit

    A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is ...
  5. Marginal Utility

    The additional satisfaction a consumer gains from consuming one more unit of a good or service. Marginal utility is an important ...
  6. Contango

    A situation where the futures price of a commodity is above the expected future spot price. Contango refers to a situation ...
Trading Center