FXStreet Expert Contributor
FXStreet
Have you ever read news updates mentioning rising unemployment or falling payrolls yet you don't have a clue what these mean for the forex market? Well, today is your lucky day because I'm giving you a rundown of the jobs releases you should watch out for and why they are important.
For instance, if a total of 1,500 citizens in the fictional country called Genovia had jobs in January then the number of employed folks dropped to 1,000 the following month, the monthly employment change figure would be -500. In effect, the employment change report indicates whether jobs were created or lost during the period.
The U.S. version of this report is more popularly known as the NFP or non-farm payrolls figure, typically released at the start of every month. Canada and Australia also publish their employment change reports monthly while New Zealand has a quarterly release.
Even though market participants tend to pay more attention to the employment change figure than to the unemployment rate, the latter is still worth taking note of because it also provides clues on whether the labor force grew or shrank during the period.
The U.S. releases its initial jobless claims data on a weekly basis, usually every Thursday. And just as the Brits refer to potato chips as crips and mom as mum, the U.K. version of the jobless claims report is called the claimant count change and is released every month.
Think about it. If you're not worried about finding a job or holding on to your current one, you'd be less tight-fisted with your cash and be more willing to spend. Financial confidence then leads to stronger domestic demand, which is good for local industries. As businesses try to keep up with the rising demand for their products, they might decide to increase manufacturing or expand their operations. All in all, these result in stronger economic growth.
In a nutshell, positive jobs reports reflect better economic conditions and brighter growth prospects. In turn, a country's upbeat economic outlook stokes demand for its currency, driving up its value. Better keep this in mind when you see an upcoming jobs report in the economic calendar!
Employment Change
Perhaps one of the most closely watched releases for any major economy is its employment change report, which shows the change in the number of people who have jobs for a particular period.For instance, if a total of 1,500 citizens in the fictional country called Genovia had jobs in January then the number of employed folks dropped to 1,000 the following month, the monthly employment change figure would be -500. In effect, the employment change report indicates whether jobs were created or lost during the period.
The U.S. version of this report is more popularly known as the NFP or non-farm payrolls figure, typically released at the start of every month. Canada and Australia also publish their employment change reports monthly while New Zealand has a quarterly release.
Unemployment Rate
Most major economies print their unemployment rate along with their employment change reports. The unemployment rate or jobless rate is simply the percentage of people in the work force without jobs but are able and willing to work.Even though market participants tend to pay more attention to the employment change figure than to the unemployment rate, the latter is still worth taking note of because it also provides clues on whether the labor force grew or shrank during the period.
Jobless Claims
The jobless claims report shows the number of individuals who filed for unemployment benefits. A positive figure means that some folks lost jobs during the period while a negative figure implies job creation. Make sure you take note of this because it can get confusing!The U.S. releases its initial jobless claims data on a weekly basis, usually every Thursday. And just as the Brits refer to potato chips as crips and mom as mum, the U.K. version of the jobless claims report is called the claimant count change and is released every month.
Why are these reports important?
Employment figures are considered leading indicators of economic growth as the state of the labor market provides clues on future consumer spending and business investment.Think about it. If you're not worried about finding a job or holding on to your current one, you'd be less tight-fisted with your cash and be more willing to spend. Financial confidence then leads to stronger domestic demand, which is good for local industries. As businesses try to keep up with the rising demand for their products, they might decide to increase manufacturing or expand their operations. All in all, these result in stronger economic growth.
In a nutshell, positive jobs reports reflect better economic conditions and brighter growth prospects. In turn, a country's upbeat economic outlook stokes demand for its currency, driving up its value. Better keep this in mind when you see an upcoming jobs report in the economic calendar!
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Editors’ Picks
EUR/USD looks vacillating around 1.1800
EUR/USD alternates gains with losses around the 1.1800 neighbourhood amid marginal gains at the end of the week. The pair’s tepid move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the irresolute price action in the US Dollar.
GBP/USD slips back to daily lows near 1.3450
GBP/USD trades on the back foot on Friday, adding to Thursday’s losses around the 1.3450 region. Cable’s move lower comes amid the lacklustre performance of the Greenback in a context of a wide spread absence of volatility.
Gold flirts with four-week highs past $5,200
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