Recently, someone asked me how to distinguish between the Small Non-Farm and the Large Non-Farm. In fact, both of these data points are very important for investors, but they are completely different in nature.

First, let’s talk about the Small Non-Farm. Its full name is the ADP National Employment Report. This data comes from ADP—the company that provides payroll processing services. It is typically released on the first Wednesday of each month, which is two days earlier than the Large Non-Farm. The Small Non-Farm reflects the number of new jobs added by U.S. private companies; government-sector employment is not included. Although it is not an official figure, because it is released early, many investors use it to forecast what the upcoming Large Non-Farm will look like.

Next is the Large Non-Farm, which is the U.S. Non-Farm Employment Report (NFP). This is the real official data, released by the U.S. Bureau of Labor Statistics, and it usually comes out on the first Friday of each month. The Large Non-Farm covers a wider scope, including employment changes in both private and government sectors, and it also releases multiple indicators at the same time, such as the unemployment rate and average hourly earnings. Because of this, the Large Non-Farm is considered one of the most crucial economic indicators in the United States, and it has a major impact on Federal Reserve policy decisions and overall market expectations.

To put it simply, the core differences between the two start with their data sources. The Small Non-Farm is based on ADP’s client payroll data, and its coverage is relatively limited. The Large Non-Farm, on the other hand, is official statistics with much higher authority. Second is the coverage: the Small Non-Farm only looks at private companies, while the Large Non-Farm includes both public and private sectors. In addition, since the Small Non-Farm often differs from the Large Non-Farm, the market places noticeably more importance on the Large Non-Farm.

For short-term stock market trends, the impact of the Small Non-Farm is actually limited. It mainly serves as a reference direction: the market adjusts its expectations for the Large Non-Farm based on the results, but because it lacks sufficient authority, volatility is usually not too large. By contrast, the Large Non-Farm is different. If the employment data comes in above expectations, it indicates strong economic performance, and the stock market typically rises. Conversely, if the data is below expectations, investors worry about an economic slowdown, and the stock market may face downward pressure.

In short, the Small Non-Farm is a warning indicator, while the Large Non-Farm is the real heavyweight data that can move the market. If you follow U.S. stock market trends, you definitely need to keep a close watch on the Large Non-Farm.