INTRODUCTION

Non-farm payroll is a key economic indicator that provides insight into the health of
the labor market in the United States. It is a monthly report released by the U.S. Bureau of
Labor Statistics and provides data on the number of people employed in non-farm
industries such as manufacturing, construction, healthcare, and mining, among others. The
report is closely watched by economists, policymakers, and investors as it is considered to be
a leading indicator of economic growth. An increase in non-farm payroll employment is
generally seen as a positive sign for the economy, while a decrease is viewed as a negative
indicator. In addition to providing information on employment, the non-farm payroll report
also includes data on average hourly earnings and average weekly hours worked, which can
provide further insight into the health of the economy. Overall, the non-farm payroll report
is an important tool for analysing the strength and direction of the U.S. labor market and is a
key factor in shaping economic policy decisions.

EMPLOYEES CONTRIBUTING TO NONFARM PAYROLL

The non-farm payroll report in the United States includes data on the number of
people employed in non-farm industries. Nonfarm payrolls include 80% of the number of
workers in the U.S. This excludes people employed in agricultural, private household, and
government industries. Here are some examples of the types of workers who come under
the non-farm payroll:
Manufacturing workers: This includes workers employed in the production of goods such as
automobiles, machinery, and electronics.
Construction workers: This includes workers employed in the construction of buildings,
highways, bridges, and other infrastructure.
Healthcare workers: This includes workers employed in hospitals, clinics, and other
healthcare facilities, including doctors, nurses, and support staff.
Retail workers: This includes workers employed in stores, supermarkets, and other retail
outlets, including salespeople and cashiers.
Professional and business services workers: This includes workers employed in legal,
accounting, and consulting firms, as well as other professional services such as advertising,
engineering, and architecture.
Leisure and hospitality workers: This includes workers employed in hotels, restaurants, and
other hospitality-related industries, including servers, bartenders, and housekeeping staff.
Transportation and warehousing workers: This includes workers employed in the
transportation of goods and people, including truck drivers, delivery drivers, and airline staff
HOW IS IT MEASURED?
The non-farm payroll report is compiled and released by the U.S. Bureau of Labor
Statistics (BLS) on a monthly basis. The report is based on data from two surveys: the
establishment survey and the household survey.
Establishment Survey:
The establishment survey is a monthly survey conducted by the U.S. Bureau of Labor
Statistics (BLS) to collect information on employment, hours worked, and earnings from a
sample of non-farm businesses and government agencies. The establishment survey, also
known as the Current Employment Statistics (CES) survey, collects data from approximately
122,000 businesses and government agencies, covering about one-third of all non-farm
payroll employees in the United States. The survey is conducted through a combination of
online reporting and telephone interviews with employers.
The establishment survey collects data on the number of employees on the payroll,
the number of hours worked, and average hourly earnings by industry and sector. It also
collects data on the number of new jobs created or lost during the previous month, which is
a key indicator of labor market conditions. The establishment survey is used to produce
estimates of employment, hours worked, and earnings for various industries and sectors of
the economy. The data collected from the establishment survey is also used to estimate the
unemployment rate and other key labor force indicators.

Household Survey:
The household survey is a monthly survey conducted by the U.S. Bureau of Labor
Statistics (BLS) to collect information on the labor force status of individuals aged 16 years
and older who live in households. The household survey, also known as the Current
Population Survey (CPS), collects data from approximately 60,000 households across the
United States. The survey is conducted through a combination of telephone interviews and
in-person visits by trained interviewers.
The household survey collects data on the labor force status of individuals, including
whether they are employed, unemployed, or not in the labor force. It also collects data on
the characteristics of the labor force, including age, gender, education level, and industry of
employment. The data collected from the household survey is used to calculate the
unemployment rate, which is a key indicator of labor market conditions. The survey also
provides information on other labor force characteristics, such as the labor force
participation rate and the number of people who are working part-time for economic
reasons.
IMPLICATIONS
The non-farm payroll report in the United States is an important economic indicator
that has several implications for the economy, monetary policy, and financial markets. Here
are some of the key implications of the non-farm payroll report:
Economic growth: The non-farm payroll report provides insight into the strength and
direction of the U.S. labor market, which is a key driver of economic growth. An increase in
non-farm payroll employment is generally seen as a positive sign for the economy, while a
decrease is viewed as a negative indicator.
Inflation: The non-farm payroll report can also have implications for inflation. Strong job
growth and low unemployment can lead to higher wages and increased demand for goods
and services, which can put upward pressure on prices. As a result, the Federal Reserve
closely monitors the non-farm payroll report as part of its efforts to maintain price stability
and manage inflation.
Monetary policy: The non-farm payroll report is also an important factor in shaping
monetary policy decisions. A strong labor market can lead to higher interest rates as a way
to curb inflation, while a weak labor market can lead to lower interest rates to stimulate
economic growth. As a result, the Federal Reserve uses the non-farm payroll report to
inform its decisions on interest rates and other monetary policy measures.
Financial markets: The non-farm payroll report can also have significant implications for
financial markets. A positive report can lead to increased investor confidence and higher
stock prices, while a negative report can lead to a sell-off in the markets. The report can also
affect currency exchange rates and commodity prices, as investors adjust their expectations
for economic growth and inflation

RELATIONSHIP BETWEEN NON-FARM PAYROLL AND UNEMPLOYMENT RATE

The unemployment rate and nonfarm payroll are two closely related indicators of the
health of the US labor market. The unemployment rate measures the percentage of the
labor force that is unemployed but actively seeking employment, while the nonfarm payroll
measures the number of paid workers in the US excluding farm workers, government
employees, and non-profit organization employees.
Generally speaking, when nonfarm payroll numbers increase, it is a sign of a growing
economy, which often leads to lower unemployment rates. This is because when businesses
are adding jobs and expanding, more people are employed, which leads to a decrease in the
unemployment rate. Conversely, when nonfarm payroll numbers decline or are stagnant, it
can lead to higher unemployment rates as businesses cut jobs or are not hiring.
However, it is important to note that the relationship between nonfarm payroll and the
unemployment rate is not always straightforward. There can be other factors that influence
the unemployment rate, such as changes in labor force participation, seasonal fluctuations,
and structural changes in the labor market.

ANALYSIS OF NON-FARM PAYROLL

Non-Farm Payrolls in the United States averaged 124.40K from 1939 until 2023,
reaching an all-time high of 4565K Thousand in June 2020 and a record low of -20514K
Thousand in April 2020. The total nonfarm employment rose by +236,000 in March on a
seasonally adjusted basis, while temporary help services employment fell by -10,700 jobs.
The national unemployment rate declined to 3.5% from 3.6% in February, even as labor
force participation rose from 62.5% in February to 62.6% in March.
Employment statistics
Employment expanded in most industry groups. The group with the largest gain was
once again Leisure and hospitality, which added +72,000 jobs; followed by Health and social
assistance, which added +50,800 jobs; and Professional services (excluding temporary help)
which added +49,700 jobs. Employment declined in five sectors, with the most severe
decline occurring in Retail trade, with a loss of -14,600. Employment also fell in Temporary
help services, which fell by -10,700; Construction, which fell by -9,000; Financial activities,
which fell by -1,000; and Manufacturing, which fell by -1,000
Household survey data analysis
Both the unemployment rate, at 3.5 percent, and the number of unemployed
persons, at 5.8 million, changed little in March. Among the major worker groups, the
unemployment rate for Hispanics decreased to 4.6 percent in
March, essentially offsetting an increase in the prior month. Among the unemployed, the
number of permanent job losers increased by 172,000 to 1.6 million in March, and the
number of re-entrant to the labor force declined by 182,000 to 1.7 million. The number of
long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.1 million
in March. These individuals accounted for 18.9 percent of all unemployed persons
The number of people employed part-time for economic reasons remained unchanged at
4.1 million in March. The number of persons not in the labor force who currently want a job
was little changed at 4.9 million in March and has returned to its February 2020 level.
Among those not in the labor force who wanted a job, the number of persons marginally
attached to the labor force was little changed at 1.3 million in March.

Establishment survey data analysis

. Total nonfarm payroll employment increased by 236,000 in March, compared with
the average monthly gain of 334,000 over the prior 6 months. In March, employment
continued to trend up in leisure and hospitality, government, professional and business
services, and health care. In March, average hourly earnings for all employees on private
nonfarm payrolls rose by 9 cents, or 0.3 percent, to $33.18. Over the past 12 months,
average hourly earnings have increased by 4.2 percent. In March, average hourly earnings of
private-sector production and nonsupervisory employees rose by 9 cents, or 0.3 percent, to
$28.50
The average workweek for all employees on private nonfarm payrolls edged down by 0.1
hours to 34.4 hours in March. In manufacturing, the average workweek was unchanged at
40.3 hours, and overtime remained at 3.0 hours. The average workweek for production and
nonsupervisory employees on private nonfarm payrolls was unchanged at 33.9 hours

CONCLUSION
The labor force participation rate has been declining in recent years, and this trend is
expected to continue. This could lead to slower growth in nonfarm payrolls as fewer people
are entering the labor market. There has been a growing demand for skilled workers, and as
a result, wages for certain positions are expected to increase in the coming years. This could
help to support continued growth in nonfarm payrolls. The increasing use of automation and
artificial intelligence could have a significant impact on nonfarm payroll in the future. The
monthly changes in payrolls can be extremely volatile due to their high relation with
economic policy decisions made by the Federal Reserve. The number is also subject to
strong reviews in the upcoming months, and those reviews also tend to trigger volatility in
the Forex board. It is expected that the Non-Payroll will rise by around 179k for the month of
April which will be comparatively lesser than the previous month.