What you'll learn
- Read the payrolls report and its three key numbers
- Understand why employment matters to policy
- Know the employment data for other major economies
Nonfarm payrolls
| Figure | What it shows | Market reading |
|---|---|---|
| Payrolls change | Net jobs added last month, excluding farms | Above forecast strengthens USD; revisions to prior months matter too |
| Unemployment rate | Share of the labour force without work | A rise is dovish; watch participation as well |
| Average hourly earnings | Wage growth, month on month and year on year | Fast wage growth feeds inflation; hawkish |
Why the Fed cares
The Fed's mandate includes maximum employment, so a weakening labour market is a reason to cut and a tight one is a reason to hold or raise. Wages also feed inflation, particularly in services, so earnings growth is read as an inflation signal. The report is noisy, with large revisions, and the market often reverses its first reaction within the hour as the details are read.
The wider labour picture
- Weekly jobless claims: a Thursday release that tracks layoffs in near real time.
- JOLTS: job openings, a measure of labour demand.
- ADP: a private payrolls estimate two days before the official one, watched but unreliable as a predictor.
- The employment cost index: the Fed's preferred wage measure, quarterly.
Other economies
The UK publishes unemployment, employment and wage data monthly, and wage growth has been a sterling driver. Australia's labour force report moves the AUD. Canada's jobs report often lands on the same day as the US one, which makes USD/CAD hard to read for an hour. The eurozone publishes unemployment monthly but wages only quarterly, so the ECB leans on negotiated wage data.
Key takeaways
- Payrolls, unemployment and earnings are the three numbers; revisions matter.
- Employment is half the Fed's mandate and wages feed inflation.
- Claims, JOLTS, ADP and ECI fill in the picture between reports.
- The first reaction is often reversed as details are read.
Knowledge check
Trading forex, CFDs and other leveraged products carries a high risk of losing money. This lesson is general education, not advice. Risk disclosure.