Is US Non-farm Payrolls (NFP) really that important? A single article to understand how it affects your Wallet.

What are US Non-farm Payrolls (NFP)? What's the difference between large NFP and small NFP?

Every month, Wall Street waits for a report - US Non-farm Payrolls (NFP). Simply put, it is the “employment report” published monthly by the U.S. Department of Labor, which includes three core indicators: non-farm employment numbers, unemployment rate, and others.

But there is actually a “little brother” called ADP data (small non-farm), released by private research institutions, sampled from about 500,000 American companies with 35 million employees. Although it is not official data, its authority is also quite good.

Remember the timing:

• US Non-farm Payrolls (NFP): The first Friday of every month (Taipei time 20:30 or 21:30)
• US Non-farm Payrolls (NFP): the first Wednesday of each month (Taipei time 20:00 or 21:00)

The small non-farm is equivalent to “a teaser of the official data,” which can provide the market with a reference signal a few days in advance.

Why are global investors keeping an eye on it?

Simple and straightforward logic:

US Non-farm Payrolls (NFP) Up = Employment Good → Economy Active → Companies Make Money → People Dare to Spend → US Economy Improving

US Non-farm Payrolls (NFP) Down = Poor Employment → Economic Slowdown → Company Layoffs → Consumption Shrinks → Economic Alarm Sounds

This set of data accounts for over 80% of the US GDP, so the Federal Reserve pays special attention when formulating interest rate policies. If the employment data is too strong, the Federal Reserve may consider raising interest rates; if it is too weak, it may lower interest rates to stimulate.

How to read this report without falling into pitfalls?

After obtaining the data, don't just focus on the numbers themselves; look at the trends. For example, compare the average growth over the past 12 months instead of just fixating on the absolute value for this month.

At the same time, don't focus on just one indicator; it should be used in conjunction with others: the unemployment rate has a lagging effect, so it is more reliable to look at it together with CPI and consumption data.

How do US Non-farm Payrolls (NFP) affect various markets?

Stock Market: Strong data = Good economy = Companies making money = Stock market rises; conversely, it falls. Investor psychology is that simple.

Foreign Exchange Market: Data exceeds expectations → Strong U.S. economy → International funds rush to the dollar → Dollar appreciates. Conversely, data explosion has the opposite effect.

Cryptocurrency Market: There is no direct relationship, but the indirect effects are significant. When the US Non-farm Payrolls (NFP) data is good, people have more confidence in traditional finance, which may reduce high-risk cryptocurrency investments; however, if the Non-farm data goes bad, some people may treat cryptocurrencies as a “safe-haven asset” and flow into them instead.

Market Index: Following the logic of the stock market, good data leads to a rising index, while poor data results in a declining index.

How should investors use it?

Core suggestion: Don't let a single data point lead you by the nose.

US Non-farm Payrolls (NFP) are indeed important, but investment decisions should be based on a comprehensive analysis of fundamentals + technical signals. Impulsively placing orders upon seeing data releases is often the beginning of pitfalls. The key is to understand the underlying logic and then operate cautiously according to your own trading plan.