Non-Farm Payroll

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Nonfarm Payroll: What It Means and Why It Matters

Key takeaways
* Nonfarm payroll (NFP) measures the number of wage and salary workers in the U.S. economy, excluding farm employees, the self‑employed, private household workers, nonprofit and some special government employees, and active-duty military.
* The Bureau of Labor Statistics (BLS) collects NFP data through its establishment survey and reports it monthly in the Employment Situation summary.
* NFP influences economic analysis and financial markets—affecting GDP expectations, inflation outlooks, stock prices, the U.S. dollar, Treasury yields, and commodity prices.
* The report is released on the first Friday of each month at 8:30 a.m. ET and reflects the prior month’s data.

What nonfarm payroll measures

Nonfarm payroll is the BLS count of paid employees on business and government payrolls across the United States, excluding certain categories. It covers roughly 80% of workers who contribute to GDP and is a primary indicator of employment trends and labor demand.

Common exclusions
* Farm workers
* Self‑employed and unincorporated proprietors
* Private household employees and domestic workers
* Active-duty military personnel
* Certain intelligence or special‑designation government positions
* Some nonprofit staff (depending on classification)

How the data are collected

The Employment Situation report combines two separate surveys:

  1. Household survey (Current Population Survey)
  2. Measures unemployment rate and demographic breakdowns (age, gender, race, education).
  3. Provides the labor force participation rate (share of population age 16+ employed or actively seeking work).

  4. Captures alternative employment arrangements and reasons for unemployment.

  5. Establishment survey (Current Employment Statistics)

  6. Produces the nonfarm payroll count—jobs added or lost each month.
  7. Breaks job changes down by industry (manufacturing, services, government, durable/nondurable goods).
  8. Reports hours worked and average hourly earnings.

Why analysts and markets watch NFP

  • Economic signaling: Job growth or declines inform expectations for consumer spending, GDP, and business sentiment.
  • Inflation and policy: Strong payroll gains and rising wages can increase inflation pressure and influence central bank policy decisions.
  • Financial market reaction: Surprising NFP results can move equities, currencies (especially the U.S. dollar), bond yields, and commodities like gold.
  • Sector insight: The establishment survey shows which industries are adding or cutting jobs, guiding investment and policy analysis.

Timing and interpretation

  • Release schedule: Monthly, first Friday at 8:30 a.m. ET, covering the previous month.
  • Indicator type: NFP is not a leading indicator; it is a current snapshot of labor market conditions. Economists use it alongside other indicators to forecast future economic activity.
  • Use with context: Because the report has multiple components (unemployment rate, participation rate, wages, sector detail), avoid judging the labor market solely on the headline payroll number.

Conclusion

Nonfarm payroll is a central monthly measure of U.S. employment derived from the BLS establishment survey. Along with household survey metrics, it provides a broad view of labor market health and influences economic forecasts and financial markets. Interpreting NFP requires looking beyond the headline job count to wage growth, participation rates, and industry-level trends.