Importance
The employment situation is the primary monthly indicator of aggregate economic activity because it encompasses every major sector of the economy. It is comprehensive and available early in the month. Many other economic indicators are dependent upon its information. It not only reveals information about the labor market, but about income and production as well. In short, it provides clues about other economic indicators reported for the month and plays a big role in influencing financial market psychology during the month.

Interpretation
The bond market will rally when the employment situation shows weakness, but bond prices will fall when the employment situation is robust. The equity market often rallies with the bond market because low interest rates are good for stocks. But sometimes the two markets move in opposite direction. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are worried about the potential for inflationary pressures.

The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.

Nonfarm payroll employment indicates the current level of economic activity. Increases in nonfarm payrolls translates into earnings that workers will spend on goods and services in the economy. The greater the increases in employment, the faster the total economic growth. When the economy is in the mature phase of an expansion, rapid increases in employment cause fears of inflationary pressures if rapid demand for goods and services can't be met by current production.

When the average workweek is trending higher, it supports production gains in the current period and portends additional employment increases. When the average workweek is in a declining mode, it probably is signaling a potential slowdown in employment growthÑor even outright declines in employment in case of recession.

Gains in average hourly earnings represent wage pressures. It is worth noting that these figures aren't adjusted for overtime pay or shifts in the composition of the workforce which affects wages on its own. Market participants believe that a rising trend in hourly earnings will lead to higher inflation. But if increased wages are matched by productivity gains, producers won't increase product prices with wages because their unit labor costs are stable.

Frequency
Monthly.

Source
Bureau of Labor Statistics, U.S. Department of Labor

Availability
Usually the first Friday day of the month.

Coverarge
Data are for the previous month. (Data for June are released in July.)

Revisions
Monthly, data for the two prior months are revised to incorporate more complete information.

Annually, benchmark revisions and new seasonal adjustment factors are introduced. Annual revisions to the Establishment Survey (payrolls) occur in June with the release of the May data. Annual revisions to the Household Survey (unemployment rate) occur in January with the release of the December data. The revisions affect five years of data. The magnitude of revisions is usually moderate, but sometimes substantial.