Recently, I’ve been asked how to understand the impact those U.S. employment data have on the market, so I decided to sort this out clearly today.

Many people know that there’s an event called “Non-Farm Payrolls” (NFP) that’s important, but in fact there are two employment reports worth paying attention to each month. The first comes from the ADP employment report—what people often call the “small non-farm.” It is usually released on the first Wednesday of every month. ADP is a company that provides payroll processing services. They use their own clients’ payroll data to compile and calculate the number of new jobs in the private sector. Even though it sounds very professional, to put it plainly, it’s essentially a reference indicator. The market uses it to anticipate what the real NFP will look like.

Then, two days later, the U.S. Bureau of Labor Statistics releases the official non-farm employment report—this is the real “big NFP.” Big NFP covers employment changes across all non-agricultural areas in the United States, including both the private sector and the government sector. Its data coverage is broader and its authority is higher. It includes key indicators such as the number of new jobs, the unemployment rate, and average hourly earnings, all of which are important references for the Federal Reserve when making monetary policy decisions.

The biggest difference between the two is the data source and the scope of coverage. The small non-farm only looks at private companies, while the big NFP is an official comprehensive statistic. This is why they often diverge. Sometimes the small non-farm looks strong, but the big NFP comes in weaker than expected, and vice versa. As a result, the market tends to pay far more attention to the big NFP than to the small non-farm.

From a trading perspective, the small non-farm has limited impact in the short term, but if the data comes in clearly above or below expectations, it can still trigger market adjustments. The real “damage” comes from the big NFP. If the big NFP employment data beats expectations, it suggests the economy is in good shape, which usually boosts U.S. stocks. Conversely, if the data is weaker than expected, investors may worry about a recession, and the stock market could fall accordingly.

So if you’re trading U.S. stocks or focusing on macro factors, the big NFP is definitely worth marking on your calendar. It’s released on the first Friday of every month, and on that day the market is typically more volatile—getting prepared in advance is a smart move.