What is the Nonfarm Payrolls?
Total nonfarm payroll employment counts employees on nonfarm payrolls who worked or received pay for any part of the pay period including the 12th. It comes from the Current Employment Statistics survey of about 119,000 businesses and government agencies, representing about 622,000 worksites and approximately 26 percent of all nonfarm payroll jobs.
BLS states that the 90 percent confidence interval on the monthly change in total nonfarm employment is on the order of plus or minus 122,000. People holding more than one job are counted on each payroll, which differs from the household survey.
Production facts:
- Publisher: U.S. Bureau of Labor Statistics
- Frequency: Monthly
- Typical release time: 8:30 a.m. ET with Employment Situation
- Primary metric: Monthly payroll change
- Market sensitivity: Very High
- Data type: Hard data
- Economic indicator type: Coincident
- Revision risk: High
Key components to watch
The headline (Monthly payroll change) is the most widely quoted but rarely the most informative number. The components that follow reveal whether the headline result is broad-based or concentrated, improving or deteriorating, and consistent with prior trends.
- Total nonfarm employment
- Total private employment
- Government employment
- Industry sectors and selected detail
- Average hourly earnings
- Average weekly hours
For any release with multiple components, the investor's task is not to memorize every number but to identify which components are most relevant to the current investment thesis and track those with the most care.
How to read the headline: actual versus expected
Markets react to the gap between the published Monthly payroll change and the consensus forecast, not to the level alone. A stronger-than-expected or weaker-than-expected result is defined against that forecast, so check what was expected before reading the number.
The Nonfarm Payrolls carries high revision risk: The prior 2 months are routinely revised for additional sample reports and recalculated seasonal factors, and an estimate is final only after two successive revisions. Read any revision to the prior period together with the new figure.
Market impact by asset class
The Nonfarm Payrolls primarily affects the following markets: Stocks, Treasuries, Fed funds futures, USD.
Stronger than expected result: In an inflation-elevated, tightening environment, a stronger result typically pressures interest-rate-sensitive assets and can strengthen the dollar. In a growth-slowing environment, a stronger result can be equity-supportive if it reduces recession fears.
Weaker than expected result: In a growth-concern environment, a weaker result may reinforce concerns about economic deceleration. If the Fed is watching this specific indicator for policy calibration, a persistent pattern of below-consensus results may shift the rate path.
In-line result: In-line results typically produce muted market reactions unless there are significant component deviations from expectations. The market had already priced the consensus, so confirmation requires little repricing.
Revision risk and methodology notes
The Nonfarm Payrolls carries high revision risk. The prior 2 months are routinely revised for additional sample reports and recalculated seasonal factors, and an estimate is final only after two successive revisions. Each year the sample estimates are benchmarked to unemployment insurance records; the absolute average benchmark revision over the prior 10 years is 0.2 percent.
Primary source: U.S. Bureau of Labor Statistics: Nonfarm Payrolls.
Publisher documents read for this page:
Common investor mistakes
- Reacting to the headline without checking the components. The headline can diverge significantly from the underlying trend revealed by the components. A headline beat driven by a volatile component may not indicate the same strength as a broad-based improvement.
- Ignoring revisions to prior periods. An initial strong number revised down in the following release tells a different story than a number that stands firm.
- Not knowing what is consensus-priced. Reacting to a number without knowing what was already expected conflates information with noise. The market reaction is driven by the deviation from expectations, not by the level of the number.
- Applying the same interpretation across different regimes. The same headline result has different implications depending on the Fed's current stance, the growth trend, and what is already priced into the yield curve and equity multiples.
Related releases
The Nonfarm Payrolls should be read alongside:
- Employment Situation (Jobs Report)
- Unemployment Rate
- Average Hourly Earnings
- Labor Force Participation Rate
- Employment-Population Ratio
Frequently asked questions
What is the Nonfarm Payrolls?
Total nonfarm payroll employment counts employees on nonfarm payrolls who worked or received pay for any part of the pay period including the 12th. It comes from the Current Employment Statistics survey of about 119,000 businesses and government agencies, representing about 622,000 worksites and approximately 26 percent of all nonfarm payroll jobs. It is published monthly by U.S. Bureau of Labor Statistics.
When is the Nonfarm Payrolls released?
The Nonfarm Payrolls is released by U.S. Bureau of Labor Statistics on a monthly schedule: 8:30 a.m. ET with Employment Situation. Exact dates are on the publisher's release calendar.
How does the Nonfarm Payrolls affect markets?
The Nonfarm Payrolls primarily affects Stocks, Treasuries, Fed funds futures, USD. Its typical market sensitivity is rated Very High. A result that comes in stronger than consensus expectations generally moves affected markets directionally, while a weaker result can have the opposite effect. The direction depends on the current macro regime and what is already priced into markets.
What is the revision risk for the Nonfarm Payrolls?
The Nonfarm Payrolls carries high revision risk. The prior 2 months are routinely revised for additional sample reports and recalculated seasonal factors, and an estimate is final only after two successive revisions. Each year the sample estimates are benchmarked to unemployment insurance records; the absolute average benchmark revision over the prior 10 years is 0.2 percent.