Recently, many people have asked me how to understand the impact of non-farm payroll data on the market, so today I will clarify this matter.

Speaking of U.S. employment data, there are actually two particularly important indicators that everyone needs to distinguish between. One is the employment report released by ADP, which we usually call the "small non-farm," and the other is the official non-farm employment report issued by the U.S. Bureau of Labor Statistics, also known as the "big non-farm."

The small non-farm comes from ADP's payroll processing data, reflecting only employment in the private sector. Its advantage is that it is released early—usually on the first Wednesday of each month, two days before the big non-farm. Therefore, many traders use it to predict the direction of the big non-farm. But honestly, the coverage of the small non-farm is narrower, and it often differs from the official data, so the market's reaction to it is usually less intense than to the big non-farm.

The real highlight is the big non-farm. On the first Friday of each month, the U.S. Bureau of Labor Statistics releases the non-farm employment report, which covers all employment changes in both private and government sectors, making it highly authoritative. Key indicators such as new jobs added, the unemployment rate, and average hourly wages are all included.

My observation is that once the big non-farm data is released, the market's reaction is often very direct. If the non-farm employment data exceeds expectations, it indicates steady economic growth, and the stock market usually rises accordingly. Conversely, if the data falls short of expectations, investors start to worry about an economic recession, and the stock market may experience short-term pressure. That’s why many professional traders adjust their positions before and after the non-farm release.

In simple terms, the small non-farm is just a reference; the real market-moving data is the big non-farm. If you want to seize market opportunities brought by employment data, you should focus on the official non-farm report.