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June 30, 2014

Nonfarm Payrolls - Explained By Michael Hansen

Nonfarm payrolls is something you want to be familiar with if you want to have an edge in finance. Nonfarm Payrolls, aka NFP, describes goods, construction and manufacturing companies in the US. NFP excludes farm workers, private household employees, or non-profit organization employees.

This influential statistic and economic indicator is released monthly by the United States Department of Labor as part of a report on the state of the labor market.

The financial assets that are most affected by NFP info include the US dollar, equities and gold. The markets react quickly and most of the time in a volatile fashion around the time the NFP info is released. The short-term market changes indicate there is a strong correlation between the NFP info and the strength of the US dollar.

The info is realeased by the Bureau of Labor Statistics on the third Friday after the conclusion of the reference week, at 8:30 a.m. Eastern Time. Nonfarm payroll is included in the monthly Employment Situation, most commonly referred to as “the jobs report”, and affects the US dollar, the Foreign exchange market, the bond market, and the stock market.

The figure released is the change in the NFP, compared to the previous month, and is usually between +9,000 and +249,000 during non-recessional times. The NFP number is meant to represent the number of jobs added or lost in the economy over the last month, not including jobs relating to the farming industry.