Recently, many people have been asking about non-farm payroll data, so I’ll clarify the difference between the small non-farm and the large non-farm.

Let's start with the small non-farm. This is the employment report released by ADP, usually on the first Wednesday of each month. It is based on data from ADP’s payroll processing system clients and reflects the number of new jobs added by private companies in the U.S. In simple terms, it’s a “warning” to the market two days in advance.

Then comes the large non-farm, which is the official non-farm payroll report (NFP). Released by the U.S. Bureau of Labor Statistics on the first Friday of each month, this is the “main event,” covering all non-farm employment changes in both private and government sectors, including new jobs, unemployment rate, average hourly wages, and other comprehensive indicators.

What is the biggest difference between the two? The small non-farm only includes data from private companies, has a limited scope, and comes from a single company's processing system, making it less representative. The large non-farm is an official statistic, far more authoritative. In fact, small non-farm data often deviates from the large non-farm figures, so investors don’t rely on it entirely.

The impact on the market varies greatly. Since the small non-farm is released early, the market adjusts its expectations for the large non-farm based on it, which can trigger short-term volatility. However, because of its limited authority, the impact usually isn’t long-lasting. The large non-farm is different; it’s the data that can truly shake the market. If employment exceeds expectations, it signals a strong economy, and stocks tend to rise; if it falls short, investors worry about a recession, and stocks may drop accordingly.

In simple terms, the small non-farm is a reference, while the large non-farm is the decisive factor. When paying attention to non-farm data, it’s important to understand this hierarchical difference.