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 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 >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. What key U.S. economic indicators do economists track to determine if the conditions ...

    Discover the key leading U.S. economic indicators used by economic analysts to determine when the conditions for stagflation ... 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. Insights

    What You Need To Know About The Employment Report

    This widely watched indicator of economic well-being directly influences the market.
  5. 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.
  6. 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.
  7. Insights

    4 Key Indicators That Move The Markets

    Educated investors need to keep their finger on the pulse of the economy, and watching certain indicators is a good way to do that.
  8. Trading

    The Fundamentals Of Forex Fundamentals

    Charting is not the only way to analyze the foreign-exchange market. Learn how to apply fundamental analysis to the economic indicators.
  9. Trading

    Trading Around Key Options Indicators

    Learn the key economic indicators to help predict market movement.
RELATED TERMS
  1. Nonfarm Payroll

    Nonfarm payroll refers to any job outside of farms, private households ...
  2. Payroll Tax

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

    An economic indicator is a piece of economic data, usually of ...
  4. ADP National Employment Report

    A report that measures levels of non-farm private employment. ...
  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. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  2. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  3. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  4. Indirect Tax

    A tax that increases the price of a good so that consumers are actually paying the tax by paying more for the products. An ...
  5. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  6. Beta

    Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. ...
Trading Center