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A preview of next month’s US non-farm payrolls

The US non-farm payrolls data (NFP) for October will be released next month on November 7, at 13:30 GMT. As ever (except if it’s a US public holiday, when it moves to Thursday), it arrives on the first Friday of the month.

The market consensus indicates that the NFP figure this time round will be around 274,000. This means that experts expect jobs to increase more this month than they did last: September’s figure was 248,000.

Overall, NFP in 2014 has been strong. For August, though, a poor figure of 180,000 shocked the markets and triggered fears that the US economic recovery wasn’t proceeding as smoothly as hoped.

What are non-farm payrolls?

The NFP statistic represents the number of new jobs created in the US economy over the last month. As the name suggests, non-farm payrolls data comprises of payroll information excluding that of farm workers, private household employees, general government employees, and employees of not-for-profit organizations. Altogether, these personnel make up around 80% of US GDP.

The job of releasing NFP falls to the US Bureau of Labor Statistics (BLS). Understandably, government policymakers and other major players in the economy use the non-farm payrolls data to make important decisions whose impacts can affect the US economy significantly.

This explains why US non-farm payrolls data has such a profound impact on the stock, bond, and currency markets: especially when the data released deviates strongly from what was generally expected by the markets. Consequently, anyone involved in investments needs to keep a close eye on NFP releases to exploit the opportunities it provides – or evade the risks it poses.

How important is NFP?

For several reasons, NFP is one of the most important regular economic indicators to traders. Firstly, the non-farm payrolls data is probably the most important indicator in the US. Secondly, it is important to consider that the US dollar is the top currency in the world in terms of trading volume, and the US economy is still the world’s biggest.

The USD is involved in over 85% of all foreign exchange transactions and, most major commodities in global commerce are denominated in USD (oil and gold, for example). Add to this the fact that the US dollar is the global reserve currency, and it becomes clear that – to traders at least – the dollar is the most important currency in the world.

It therefore follows that non-farm payrolls data, the most important economic indicator in the US, is also one of the most important economic indicators in the world.

Trade this month’s non-farm payrolls on IG’s forex trading platform.

Spread bets and CFDs are leveraged products and can result in losses that exceed your deposits. The value of shares, ETFs and ETCs bought through a stockbroking account can fall as well as rise, which could mean getting back less than you originally put in.

This information has been prepared by IG, a trading name of IG Markets Limited. The material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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