Nonfarm payroll is a term used in the United States to represent the total number of paid workers in the economy, excluding agricultural, government, private household, and nonprofit organization employees. This metric serves as a crucial indicator of the country’s economic health, providing insights into job creation trends across various sectors.
What Does Nonfarm Payroll Include?
Nonfarm payroll encompasses employees working in industries such as manufacturing, construction, mining, financial activities, professional and business services, education and health services, leisure and hospitality, trade, transportation, and utilities. It excludes agricultural workers, government employees, private household workers, and employees of nonprofit organizations.
Why Nonfarm Payrolls Matter
Nonfarm payrolls are closely monitored by economists, policymakers, investors, and analysts because they offer valuable insights into the labor market’s dynamics. Positive growth in nonfarm payrolls indicates a growing economy and often correlates with increased consumer spending, business expansion, and overall economic prosperity. Conversely, a decline or stagnation in nonfarm payrolls may signal economic downturns, leading to reduced consumer confidence and potential contractions in business activities.
How Nonfarm Payrolls Are Calculated
The U.S. Bureau of Labor Statistics (BLS) conducts the Current Employment Statistics (CES) survey, which collects data from approximately 145,000 businesses and government agencies representing over 697,000 individual worksites across various industries and regions. Based on this survey, the BLS estimates the total number of nonfarm payroll jobs in the economy. The CES survey also provides insights into employment trends by industry, geographic region, and demographic characteristics.
Release of Nonfarm Payroll Data
The BLS releases nonfarm payroll data on the first Friday of each month as part of the Employment Situation Summary report. This report includes key labor market indicators such as the unemployment rate, average hourly earnings, and labor force participation rate. Analysts and investors closely scrutinize these figures for signs of economic strength or weakness, which can influence financial markets, monetary policy decisions, and business strategies.