Recently, someone asked me what NFP is and why the market often fluctuates when this number is announced. In fact, it is one of the most important economic indicators in the U.S. that traders need to understand clearly.

NFP, or Non-farm Payrolls, is a report on the number of new jobs created in sectors outside agriculture. The U.S. Bureau of Labor Statistics releases this figure on the first Friday of each month, at 8:30 or 9:30 AM EST. A few days earlier, the ADP report (called the small non-farm data) is released first to give traders a chance to forecast.

The advantage of the NFP indicator is that it covers most industries: manufacturing, construction, services. It does not include farmers, civil servants, non-profit organization employees, or freelancers. Therefore, this number truly reflects the health of the real economy.

Why do I pay attention to NFP? Because it directly influences the Fed’s decision on interest rates. When the data exceeds expectations, the Fed considers raising interest rates; conversely, it may lower them. This has a strong impact on the dollar price, Treasury bonds, stocks, gold, and the entire financial market.

When reading the NFP report, I don’t just look at the absolute number but also compare it with market forecasts and the previous month’s figure. If employment increases significantly, it signals that the economy is growing, consumption is rising, and corporate profits are improving. This is usually good for stocks. But if the increase is too strong, the Fed might raise interest rates more aggressively, which can put pressure on stocks.

Conversely, if NFP is weaker than expected, the market worries about an economic slowdown, and investors tend to shift to safer assets. This affects the demand for the dollar—when the Fed cuts interest rates, the dollar weakens.

An important point is to focus on the long-term trend of NFP rather than a single number. Experts often evaluate the average employment growth over 12 months to get a more comprehensive view. You should also combine NFP with other indicators like CPI, GDP, and the unemployment rate to get a full picture of the economic situation.

Understanding what NFP is and how it works will help you better forecast the market. Especially before the announcement days, I usually prepare a careful trading plan because volatility can be quite high. If you want to learn more about these economic figures and how to trade around them, you can look for trading platforms with good analytical tools to monitor real-time data.