The jobs report, formally the Employment Situation report, is published by the US Bureau of Labor Statistics on the first Friday of most months and is the single most market-moving piece of scheduled economic data. It answers two questions at once: how many jobs the economy added (non-farm payrolls) and what share of people looking for work cannot find it (the unemployment rate).
Two surveys, one report
The report combines two separate surveys that sometimes disagree. The establishment survey asks businesses how many people are on their payrolls and produces the headline payrolls number. The household survey asks people whether they are working and produces the unemployment rate and participation rate. Payrolls can rise while unemployment also rises, or unemployment can fall for the wrong reason: because people stopped looking and left the labour force entirely.
How to read it like the market does
Markets trade the gap between the number and expectations, not the number itself. Three details matter beyond the headline: revisions to the prior two months, which often change the trend more than the new print; average hourly earnings, the report’s inflation signal; and the participation rate, which explains whether the unemployment rate moved for good or bad reasons. A miss with heavy downward revisions reads far weaker than the headline alone suggests.
Why it moves everything
The Federal Reserve’s mandate is jobs and prices, so the report feeds directly into rate expectations: a weak print pulls hike bets and yields down, a hot print does the opposite. Equities trade it in two modes: when growth fears dominate, weak jobs are bad news; when rate fears dominate, weak jobs can rally stocks because they push the central bank towards easing. Knowing which regime is in force is most of the trade.