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 >>
Related Articles
  1. Trading

    4 Key Indicators That Move The Markets

    Find out what economic and market indicators to watch to anticipate and react to market movements.
  2. Insights

    What You Need To Know About The Employment Report

    This widely watched indicator of economic well-being directly influences the market.
  3. 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.
  4. 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.
  5. Insights

    5 Economic Reports You Should Watch

    Most economic reports are noise, but there are a some that are market movers.
  6. Insights

    The Top Ten Economic Indicators In The UK

    We list below ten key economic indicators for the United Kingdom, the world’s 6th-largest economy.
  7. Insights

    Leading Economic Indicators: U.S. Bureau of Labor Monthly Stats

    The Bureau of Labor Statistics' monthly employment figures are a key economic indicator. Here's how they work.
  8. Insights

    France's Economy: Wobbly But Still Important

    Which are the top macro-economic data sources for France? Here is the list to track economic indicators of France.
  9. Trading

    Economic Factors That Affect The Forex Market

    Knowing the factors and indicators to watch will help you keep pace in the competitive and fast-moving world of forex.
  10. Insights

    The Canadian Economy, At A Glance

    The 12 economic indicators described here together provide a comprehensive picture of the state of the Canadian economy.
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. ADP National Employment Report

    ADP National Employment Report is a monthly economic data release ...
  4. Payroll Card

    A prepaid card onto which an employer loads an employee’s wages ...
  5. Burden Rate

    Indirect costs associated with employees, over and above gross ...
  6. Benefit Allowance

    Money that a company or government agency provides to an employee ...
Hot Definitions
  1. Covariance

    A measure of the degree to which returns on two risky assets move in tandem. A positive covariance means that asset returns ...
  2. Liquid Asset

    An asset that can be converted into cash quickly and with minimal impact to the price received. Liquid assets are generally ...
  3. Nostro Account

    A bank account held in a foreign country by a domestic bank, denominated in the currency of that country. Nostro accounts ...
  4. Retirement Planning

    Retirement planning is the process of determining retirement income goals and the actions and decisions necessary to achieve ...
  5. Drawdown

    The peak-to-trough decline during a specific record period of an investment, fund or commodity. A drawdown is usually quoted ...
  6. Inverse Transaction

    A transaction that can cancel out a forward contract that has the same value date.
Trading Center