Nonfarm payrolls (NFP) measure the monthly change in the number of paid employees on U.S. business and government payrolls, excluding several categories such as farm workers. The figure is a central part of the U.S. Employment Situation report and is one of the most market-sensitive economic releases.
How it works
The payroll figure is estimated from a large survey of employers. The same report also includes the unemployment rate, average hourly earnings, and other labor-market measures, so traders should avoid reading the payroll headline in isolation.
Recent payroll months are frequently revised as additional employer responses arrive. A current headline can therefore be strong while revisions to prior months reveal that the labor market was weaker than initially reported.
Why it matters
Employment affects household income, consumption, inflation pressure, and central-bank policy. A large payroll surprise can quickly change expectations for Federal Reserve decisions and move Treasury yields and the dollar.
Weak payrolls are not automatically bearish for stocks. If investors focus on a lower probability of rate hikes, the valuation benefit from falling yields can outweigh concerns about growth for a particular session.
A simple market example
If payrolls fall by 23,000 when economists expected an 80,000 increase, the miss is more than 100,000 jobs. Investors then have to judge whether the main consequence is weaker growth, easier Fed policy, or both.
Common mistakes
Treating NFP as the entire labor market. Wages, unemployment, participation, hours worked, and revisions also matter.
Ignoring prior-month revisions. They can materially change the story investors thought they knew.
Frequently asked questions
Why are farm workers excluded?
The payroll survey historically excludes several categories with different employment patterns, including farm employment.
Why does NFP move markets so much?
Because labor conditions affect both economic growth and the Federal Reserve's inflation and employment objectives.
Is a strong payroll report always bad for bonds?
No, but stronger-than-expected labor data can push yields higher if it increases expectations for tighter policy.
Educational content only. Definitions describe common market usage and may vary by jurisdiction, instrument, or institution.