Nonfarm Payrolls (NFP)
How many jobs were added in a month in US sectors excluding farming — an economic thermometer and a key basis for the Fed's rate decisions.
In plain terms
Nonfarm payrolls measure how many jobs in all US industries except farming (factories, services, construction, etc.) rose or fell versus the prior month. Released the first Friday of each month, that day is "jobs day," and the market tenses up.
Lots of job gains means a strong economy. Look at the companion unemployment rate and hourly wages (rising wages mean price pressure) too.
What it tells you
Employment is the economy's thermometer. People need jobs to spend, and consumption must flow for company results to improve. So the jobs report shows the big picture of the economy.
The Fed targets "maximum employment" alongside "price stability," so the jobs report is a key basis for rate decisions. Employment running too hot can stoke wages and prices, tilting toward a rate hike.
Formula
nonfarm payrolls = the monthly change in jobs in industries excluding farming (US Labor Department, released the first Friday of each month) companion gauges: unemployment rate, hourly wages
What high or low means
Strong employment is usually a good sign for the economy, but in a hot-price phase it can be read as "too-strong employment → more rate hikes," which can conversely weigh on stocks. The same number is read oppositely by phase.
A single month's number is jumpy and gets revised later, so it is more accurate to read a multi-month trend than one release.
"Good employment = stocks up" is not always right. In a period where prices are the problem, strong employment can lead to rate-hike worry and act like bad news for stocks. What the market is worried about at the moment matters.
The released number is often revised later. Read the trend rather than overreacting to the first release.
The jobs report is macro data, so the market reaction is not always consistent. This term is background for understanding market news. (※ Our screen handles individual companies' SEC-filed financials.)
Metrics to read alongside
See it in real stocks
Search US stocks on Stocklore to see Nonfarm and other financial metrics alongside the sector average.
This explanation is for information and reference only and is not a recommendation to buy or sell any security. Investment decisions and their consequences are your own.