I recently noticed that many friends are still a bit confused about non-farm data, so I’ll briefly sort out the differences and impacts of these two economic indicators.

First, let’s talk about the “small non-farm,” meaning the ADP employment data. This is released by ADP on the first Wednesday of every month and is based on the employment situations of their payroll processing services clients. To put it simply, it can only reflect the number of new jobs added by U.S. private companies, and it doesn’t include data from government departments at all. So its accuracy is limited; more often, it’s used as a reference indicator for predicting the big non-farm payrolls.

Next is the big non-farm. Its full name is the U.S. Non-Farm Employment Report, abbreviated as NFP. This is officially released by the U.S. Bureau of Labor Statistics, and it typically comes out on the first Friday of each month. The big non-farm covers employment in both private and government sectors, so the data coverage is broader and the authority is much higher. It includes multiple indicators such as the number of new jobs added, the unemployment rate, and average hourly earnings, allowing it to reflect the real situation of the U.S. employment market in a comprehensive way.

Why do we need to distinguish between these two non-farm indicators? Because their impact on the market is completely different. The small non-farm is released two days earlier, and investors adjust their expectations for the big non-farm based on it. This can cause short-term volatility, but because the data isn’t comprehensive enough, its impact is usually relatively limited.

The big non-farm is different. It’s one of the most crucial economic indicators in the United States and has a major impact on the Federal Reserve’s monetary policy and interest rate decisions. If the employment data is above expectations, it suggests the economy is strong and may lift the stock market; if the data is below expectations, investors may worry about a recession, and the stock market could fall in the short term. So the big non-farm has a much more direct and stronger effect on the short-term trend of U.S. stocks than the small non-farm does.

In short, the small non-farm is just a reference, while the big non-farm is the truly market-moving heavyweight data. Understanding this difference is very helpful for grasping short-term market direction.