The US Non-Farm Payrolls report is more than just numbers published on the first Friday of every month; it is the "pulse of the global economy" that markets from New York to Tokyo are waiting for.
Here is an article that reviews the importance of this report and its profound impact:
Non-Farm Payrolls: The Silent Engine of the Global Economy
As the clock approaches 3:30 PM Mecca time on the first Friday of every month, financial markets hold their breath. All attention is focused on the trading screens waiting for one number released by the U.S. Bureau of Labor Statistics: Non-Farm Payrolls (NFP).
What is the NFP report?
Simply put, it is a count of the number of jobs created in the United States over the past month, excluding agricultural workers (due to its seasonal nature), government employees, and volunteers.
Why does the world tremble for this number?$BNB
The strength of this report lies in being the most accurate mirror of the health of the world's largest economy, and its importance branches into three main axes:
The consumer is king: in America, consumer spending accounts for about 70% of GDP. When jobs increase, it means higher income, and thus more spending, which drives the growth wheel.
The compass of the Federal Reserve: the central bank relies on this report to determine its monetary policy. If the report is very strong, it may raise interest rates to combat inflation. If it is weak, it may lower them to support the economy.
A shock in the markets: as soon as the number is released, we witness violent movement (Volatility) in the prices of gold, the dollar, and stock indices like 'Dow Jones'.
Beyond the headline number
The smart investor does not only look at the 'number of jobs,' but dives into other equally important details:
Unemployment rate: the percentage of the labor force that is unemployed.
Average hourly wages: a crucial indicator of inflation; as wages rise, pressure on prices increases. Note: Sometimes markets can be 'crazy'; a good number may be released but previous months' numbers are revised downwards, turning expectations upside down!
In conclusion, the non-farm payrolls report remains the monthly 'turning point' that redraws the investment map. It is a constant reminder that behind the trading screens and charts lie the lives of millions of people and their purchasing power.$BEAT
$YGG
