Nonfarm payroll is an indicator that is equal to the number of people in the United States that are currently employed outside of farming industry, private households, military and intelligence agencies. The indicator is released monthly by the U.S. Bureau of Labor Statistics. The workforce, that is included in the nonfarm payroll, accounts for 80% of the national GDP.
Why is it important?
A monthly change in the number of nonfarm payrolls can be used as an accurate indicator of the country’s economic well-being. Apparently, the number of employed people is going up when the national economy is going through an active phase and goes down when the crisis has broken out (or just about to do so).
Nonfarm payroll and trading
Nonfarm payroll has a major influence on stock and exchange markets, as it measures the health of the world’s biggest economy. By calculating the number of people employed in different industries it is possible to predict in which direction the economy is heading, what sectors of the national economy are the most prominent and what kind of economic performance can be expected in the near future.
A higher than expected reading should be taken as bullish for the USD, while a lower than expected reading should be taken as bearish for the USD.
The United States Nonfarm Payrolls
The United States Nonfarm Payrolls latest reading for the month of June 2017, was 222,000 which was higher than the forecast reading of 179,000 and the previous reading of 152,000. For the first semester of 2017 the highest reading for the Nonfarm Payrolls was 232,000 in February. The long-term average reading for the period of years 1939-2017 is 125,670 with an all-time high reading of 1,115,000 in September of 1983, and an all-time low price of -834,000 in October of 1949. For the past 5-year period the Nonfarm Payrolls readings are in a range of about 50,000-350,000 showing increased volatility.
