Employment Data — Trading NFP, UK Claimant Count, and ADP.
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What is covered in this chapter
Trading Labor Market Volatility
A central bank's mandate is rarely just inflation; it almost always includes maximizing employment. Therefore, employment releases are major market catalysts. The most famous of these is the U.S. Non-Farm Payrolls (NFP), released on the first Friday of every month. It is notorious for triggering extreme volatility, clearing out retail stop-losses in seconds.
The Employment Indicators
To understand the health of the labor market, you must track multiple data points:
- NFP (Non-Farm Payrolls): The net change in the number of jobs created in the U.S. during the previous month, excluding the farming sector.
- Average Hourly Earnings: Measures wage inflation. Even if job creation is strong, weak wage growth can prevent a central bank from raising interest rates.
- Unemployment Rate: The percentage of the total labor force that is unemployed and actively seeking employment.
- UK Claimant Count: The UK equivalent, tracking the number of people claiming unemployment-related benefits.
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