Non-Farm Payrolls (NFP)

What Is the NFP Report?

The Non-Farm Payrolls report is the headline measure of US employment change published monthly by the Bureau of Labor Statistics. It reports the net change in payroll jobs across the US economy excluding the agricultural sector, military, and certain government workers. The FRED ticker is PAYEMS (All Employees, Total Nonfarm).

The release also includes the unemployment rate (from the separate Household Survey), the labour force participation rate, average hourly earnings, and average weekly hours. The full report is dense; markets focus first on the headline NFP change, then unemployment, then wage growth.

Why It Matters for Markets

NFP is the single highest-tier macro release for short-end rates, the dollar, and equity volatility. A 50,000-job surprise in either direction can move 2-year yields by 15-25 basis points and the dollar index by 30-60 basis points within minutes.

The Fed uses NFP as the primary gauge of labour-market tightness. Combined with wage data from the same report, NFP determines whether the Fed believes the labour market is "tight" (above the level consistent with stable inflation) or "loose" (consistent with disinflation). A series of strong prints can extend the rate-hold regime; a series of weak prints can pull forward rate cuts.

How to Read the Print

Headline NFP is what algorithms read in the first second. The pre-release consensus is the reference point; surprises against consensus drive the market reaction.

Three-month moving average. More reliable than any single print because NFP is statistically noisy (standard error roughly 100,000 jobs per print). The 3-month average smooths through the noise.

Wage growth (average hourly earnings, YoY and MoM). The strongest single signal of labour-market-to-inflation transmission. Wage growth above 4% YoY has historically been inconsistent with 2% inflation.

Revisions to prior months. The BLS routinely revises the past 2-3 months as more establishment responses come in. Large negative revisions can offset a strong current-month print and vice versa.

Historical Context

NFP averaged approximately 175,000 jobs per month from 2010-2019. The pandemic shock produced the largest single-month decline on record (-20.5 million in April 2020) and the largest single-month gain (+4.8 million in June 2020). The 2021-2023 expansion was the strongest sustained NFP run in decades, with multiple +500,000 prints.

The 2024-2025 deceleration toward 150,000-200,000 monthly gains was consistent with the labour market normalising rather than weakening. The deceleration was a key factor in the Fed's confidence to begin cutting in September 2024.