Recently, I’ve noticed that many people’s understanding of U.S. non-farm payroll data still stays at a superficial level. In fact, this indicator has a much greater impact on the global financial markets than most imagine.

Let’s start with the most straightforward part. Non-farm payroll data is divided into two categories: one is the official NFP (released by the U.S. Bureau of Labor Statistics on the first Friday of each month), and the other is the private sector ADP data (released on the first Wednesday of each month). NFP includes both private and government sectors, while ADP is collected from about 500k private companies. Many people focus on the ADP first because it can give the market an early signal.

Why do so many people pay attention to non-farm payroll? Simply put, this data directly reflects the health of the U.S. economy. The productivity of non-farm employment accounts for over 80% of the U.S. GDP, so when employment data rises, it indicates economic expansion and growing consumption. Conversely, a decline in the data is a warning sign of economic slowdown. The Federal Reserve considers non-farm payroll data essential when deciding whether to raise or cut interest rates.

Speaking of market impact, this is the key point. The stock market reacts most directly: stronger-than-expected non-farm data boosts investor confidence, often pushing stock prices higher; the opposite can lead to declines. The forex market is also very sensitive—robust non-farm data usually pushes the dollar higher because it signals a strong U.S. economy, attracting international capital into the dollar. Gold and crude oil prices also fluctuate accordingly.

Interestingly, the cryptocurrency market is affected as well. On the surface, non-farm payroll data doesn’t directly impact crypto, but the indirect effects are significant. If the data exceeds expectations, traditional markets gain confidence, and people might reduce their investments in high-risk crypto assets, putting downward pressure on prices. But if non-farm payrolls disappoint, some investors worry about economic issues and turn to cryptocurrencies for hedging or higher returns, which can energize the crypto space.

The stock indices are similarly influenced. Good non-farm data can push major indices higher, while poor data might cause sell-offs.

In actual trading, my advice is to focus on the trend rather than just the numbers. For example, observing the average employment growth over 12 months is more valuable than single-month data. It’s also important to combine other indicators like the unemployment rate and CPI for a comprehensive assessment, since the unemployment rate has a lag effect. Never trade impulsively based on a single non-farm report; always incorporate fundamental analysis and technical signals.

Honestly, learning to interpret non-farm payroll data has become an essential skill for investors. Its importance cannot be overstated.