Learn · 01 of 08 · 4 min
The jobs report
Payrolls, the unemployment rate, and why the first Friday of the month is the loudest morning in markets.
What it is
The Employment Situation report comes from the Bureau of Labor Statistics at 8:30 AM Eastern, usually on the first Friday of the month, and covers the month that just ended. It is really two surveys stapled together. The establishment survey asks about 120,000 businesses and government agencies how many people were on their payrolls. That produces nonfarm payrolls, the headline job count. The household survey asks about 60,000 households who is working, who is looking, and who has stopped looking. That produces the unemployment rate.
Because the two surveys ask different people different questions, they can disagree in any given month. Payrolls can rise while unemployment ticks up if more people start looking for work. Neither is wrong; they measure different things.
How to read the numbers
Payrolls are reported as the change from the prior month, in thousands. A print of +150k means employers added 150,000 jobs on net. The economy needs some job growth just to absorb new workers, and in recent years economists have put that breakeven somewhere between 50,000 and 100,000 a month, depending on immigration and how many people are retiring.
The prior two months get revised every time, sometimes by a lot. A weak headline paired with big upward revisions is a very different report from a weak headline with downward revisions. The unemployment rate is reported to one decimal place. A move from 4.1 to 4.2 percent sounds small, but it is a change of about 170,000 people, and a run of three or four monthly increases is one of the older recession signals around.
Average hourly earnings, also in the report, show how fast wages are growing. Faster wage growth can feed inflation, so the Fed reads that line closely.
Why markets care
The Fed's job is stable prices and maximum employment, and this report is the most timely read on the employment half. A hot print pushes traders to expect higher rates for longer; a cold one raises the odds of cuts. Stocks, bonds and the dollar can all move within a second of 8:30 because everyone had a number in mind, and the surprise, not the level, is what gets traded.