Nonfarm Payroll (NFP)

What is the 'Nonfarm Payroll'

Nonfarm payroll is a term used in the U.S. to refer to any job with the exception of farm work, unincorporated self-employment, and employment by private households, the military and intelligence agencies. Proprietors are also excluded. The U.S. Bureau of Labor Statistics releases closely-followed monthly data on nonfarm payrolls as part of its Employment Situation Report. The headline figure, the change in the total number of nonfarm payrolls compared to the previous month, is used as a gauge of economic health. 

Nonfarm payrolls are reported on the first Friday of the following month, with occasional exceptions, at 8:30 a.m. The data are used to assist policymakers and economists with determining the current state of the economy and predicting future levels of economic activity.

Why the Nonfarm Payroll Report Matters

The major statistic reported from the nonfarm payroll report is the number of additional jobs added from the previous month. The report also contains many valuable insights into the labor force that have a direct impact on the stock market, the value of the U.S. dollar and the price of gold. The nonfarm payroll report is a major tool used to determine the overall health of the economy. The total nonfarm payroll accounts for approximately 80% of the workers who produce the entire gross domestic product (GDP) of the United States.

The nonfarm payroll report shows statistics of unemployment for the U.S workforce. This is communicated through an overall unemployment rate, a long term unemployment rate and a youth unemployment rate. The labor force participation rate is also a key statistic used to determine the true unemployment rate of the country.