Why is the non-farm payroll report important?
The non-farm payroll release gives an invaluable insight into the state of the world’s biggest economy, showing how US business is performing and offering an indication of where the Federal Reserve might take interest rates in the near future.
The overall number of jobs added or subtracted is an indicator of the health of the economy as a whole, and are part of the Federal Reserve’s mandate on employment – so the FOMC will pay attention to NFP figures when deciding whether to raise or lower rates.
For example, a high number of jobs can be taken as a sign of inflationary pressures, which may lead to an interest rate hike. A fall in the number, meanwhile, may indicate a declining economy, increasing the chances of a rate cut.
Interest rates have a major part to play in the movements of forex, stocks and commodities, so the non-farms report can reverberate across global markets in a big way. Find out more about how to trade NFP.