NFP (Non-Farm Payrolls) is an abbreviation for the English term "non-farm payrolls." Essentially, it is a report on the number of jobs created or lost in the non-farm sector of the US for a given month.
Why is NFP so important?
Economic condition indicator: NFP is considered one of the most important economic indicators. Strong NFP growth indicates that the US economy is expanding and unemployment is decreasing. Weak data, on the other hand, suggests a slowdown in economic growth or even a recession.
Impact on financial markets: The publication of NFP data usually causes significant volatility in currency and stock markets. Investors and traders closely monitor this data to adjust their strategies.
Monetary policy definition: The Federal Reserve System (Fed) of the USA uses NFP data when making decisions about interest rates. Strong data may lead to rate hikes, while weak data may lead to cuts.
What is included in the NFP report?
In addition to the total number of jobs created, the NFP report includes information about:
Average hourly wage: This indicator reflects wage dynamics and can influence inflation.
Unemployment rate: This indicator characterizes the share of the economically active population that is unemployed.
When is NFP data published?
NFP data is published by the US Bureau of Labor Statistics, usually on the first Friday of each month. The exact time of publication may vary.
How to use NFP data in trading?
Traders can use NFP data for:
Market situation analysis: Understanding how NFP data affects the economy and markets helps traders make more informed decisions.
Market movement direction definitions: Strong NFP data can lead to a strengthening of the US dollar and a rise in stock indices, while weak data can lead to the opposite reaction.
Development of trading strategies: Traders can develop strategies based on expected market reactions to the publication of NFP data.
It is important to remember:
Volatility: The publication of NFP data is often accompanied by high volatility in financial markets.
Unpredictability: The market's reaction to NFP data can be unpredictable and depend on many factors.
Other factors must be considered: When making trading decisions, it is important to consider not only NFP data but also other economic indicators and fundamental factors.