What Are Nonfarm Payrolls?

Nonfarm payrolls is the measure of the number of workers in the U.S. excluding farm workers and workers in a handful of other job classifications. This is measured by the Bureau of Labor Statistics (BLS), which surveys private and government entities throughout the U.S. about their payrolls. The BLS reports the nonfarm payroll numbers to the public on a monthly basis through the closely followed “Employment Situation” report.

In addition to farm workers, nonfarm payrolls data also excludes some government workers, private households, proprietors, and non-profit employees

Understanding Nonfarm Payrolls

While the name nonfarm payrolls insinuates that farm workers be excluded from the statistic, there are also several other categories that the BLS does not count when compiling nonfarm payrolls data. According to the BLS, nonfarm employee classifications account for approximately 80% of U.S. business sectors contributing to gross domestic product (GDP).

KEY TAKEAWAYS

Nonfarm payrolls is the measure of the number of workers in the U.S. excluding farm workers and workers in a handful of other job classifications.

The nonfarm payrolls classification excludes farm workers as well as some government workers, private households, proprietors, and non-profit employees.

The data on nonfarm payrolls is collected by the Bureau of Labor Statistics (BLS) and put in its monthly "Employment Situation" report, which also includes the unemployment rate.

Economic Analysis

The nonfarm payrolls number and the unemployment rate are headlines of the “Employment Situation” report but economists and policymakers use all of the available data for assessing the current state of the economy and forecasting future levels of economic activity. The report contains many valuable insights into the labor force that have a direct impact on the economy as well as the stock market, the value of the U.S. dollar, the value of Treasuries, and the price of gold

Economists analyze the Household Survey data when considering the trend in the unemployment rate, participation rate, and other trends that may be associated with demographics. The Establishment Survey/nonfarm payrolls report offers valuable information on sectors with detailed sector segregation. Several types of analysts may incorporate sector-specific nonfarm payroll data into their analysis. This breakdown can often be used by stock analysts reporting on stock sectors and earnings releases.

Nonfarm payroll statistics also show which sectors are expanding and contracting. Expanding sectors will contribute a higher number of new payrolls and contracting sectors may have low or negative contributions showing a reduction in job availability.