What is Non-farm Payroll?
NFP plays a key role as an indicator for the United States economy. With NFP, the number of jobs added to the economy is represented—this excludes jobs from farm, government, household, and non-profit organization employees. NFP usually begins on the first Friday of every month at 8:30 am EST.
Why is it important?
The data gotten through NFP is very important because, as a monthly release, it acts as an indicator for the economy’s current start. Released by the Bureau of Labor Statistics, the info from NFPs can be seen on economic calendars.
The Federal Reserve Bank uses employment as an indicator to gauge how well the economy is performing. When unemployment rates are high, policy makers try to cushion this by creating expansionary monetary policies that come with low interest rates. These policies are made to increase economic output as well as employment.
With this logic, when unemployment rates go higher than usual, the economy ends up performing below its normal potential. This pushes policy makers to create ways of stimulating the economy. Such stimulatory policy will come with lower interest rates and reduced Dollar demand.