Jobs growth is measured in the U.S. by the number of employees added to nonfarm payrolls monthly, as reported by the Bureau of Labor Statistics (BLS). It is a key indicator of the pace of economic expansion. Nonfarm payrolls are a part of the Employment Situation Summary published by the BLS, widely recognized as the monthly jobs report.
Key Takeaways
- Monthly Measures: Jobs growth is tracked by the monthly change in nonfarm payrolls as reported by the BLS.
- Revisions: Jobs growth figures are released monthly and are subject to revisions over the next two months as additional survey results are collected.
- Market Influences: These figures often influence financial markets as one of the most critical and timely economic indicators.
- Exclusions: Farm employment and agricultural jobs aren’t included in these calculations.
Understanding Jobs Growth
Jobs growth refers to the net increase in the number of nonfarm payrolls during the previous month. Employment is vital to economic performance; higher job gains suggest growth above the trend, while smaller gains or losses may signal an economic slowdown.
It is crucial to note that jobs growth numbers in the Employment Situation Summary are estimates. The data for a given month are revised in each of the next two monthly reports based on additional survey submissions. A monthly nonfarm payroll increase of about 130,000 is considered statistically significant.
Example: April 2024
In April 2024, the increase in total U.S. nonfarm payroll employment was 175,000. Meanwhile, the unemployment rate, from a separate survey, rose to 3.9% from the previous month.
How Jobs Growth Is Measured
The BLS compiles job growth data by surveying approximately 122,000 businesses and government agencies that account for about 20% of total U.S. nonfarm employment. The Employment Situation Summary provides data from this establishment survey tracking nonfarm employment by industry, along with a separate household survey of employment status. The two surveys furnish headline figures on job growth and unemployment.
Although nonfarm payrolls are aggregated by industry, the most commonly reported number is the net change in U.S. payrolls from the preceding month, which estimates jobs added outside the agricultural sector. Farm employment is excluded because it is too seasonal and harder to estimate. Due to its economic importance, job growth is closely monitored by the Federal Reserve for adjusting monetary policy.
How Jobs Growth Is Used in Investing
As a comprehensive measure of U.S. employment and one of the earliest reports for any month, the Employment Situation Summary significantly influences financial markets. Besides tallying nonfarm payrolls, the establishment survey estimates average weekly hours worked—a measure of labor demand—and average hourly earnings, an early indicator of labor cost inflation.
Because of its critical importance to both investors and policymakers, traders compare the report’s numbers with analysts’ forecasts to gauge if recent nonfarm payroll gains have exceeded or fallen short of market expectations. A single report may not signal a trend due to fluctuating numbers and revisions, making it necessary for investors to consider alongside other economic indicators. Nevertheless, the monthly jobs growth figure remains a crucial measure of economic health.
Frequently Asked Questions
Where Do You Get Jobs Growth Numbers?
The BLS derives job growth data from a survey of 122,000 businesses and government agencies, accounting for about 20% of total U.S. nonfarm employment.
What Jobs Have the Highest Growth Rate?
According to the BLS, the fastest-growing jobs from 2022 to 2032 include wind turbine service technicians, nurse practitioners, data scientists, statisticians, information security analysts, medical and health services managers, epidemiologists, and physician assistants.
What Is the U.S. Job Growth Prediction?
Total U.S. employment is expected to grow by approximately 4.7 million jobs from 2022 to 2032. Total employment is forecasted to grow by 0.3% annually, slower than the 1.2% annual growth from the previous decade (2012 to 2022). Contributing factors include slow population growth and a reduced labor force participation rate due to the aging baby boomer generation.
The Bottom Line
Jobs growth measures the number of nonfarm payroll jobs added to the economy during a month. As a leading economic indicator, it denotes the health of the economy: more job additions often signal better economic health.
Related Terms: Unemployment Rate, Labor Demand, Wage Inflation, Economic Indicators, Monetary Policy.
References
- U.S. Bureau of Labor Statistics. “Frequently Asked Questions about Employment and Unemployment Estimates”.
- U.S. Bureau of Labor Statistics. “Employment Situation Summary”.
- U.S. Bureau of Labor Statistics. “Monthly Employment Situation Report: Quick Guide to Methods and Measurement Issues”.
- Federal Reserve Bank of St. Louis. “Nonfarm Payrolls: Why Farmers Aren’t Included in Jobs Data”.
- Board of Governors of the Federal Reserve System. “How Does the Federal Reserve Affect Inflation and Employment?”
- U.S. Bureau of Labor Statistics. “Current Employment Statistics - CES (National): CES Overview”.
- U.S. Bureau of Labor Statistics. “Fastest Growing Occupations”.
- U.S. Bureau of Labor Statistics. “Employment Projections: 2022-2032 Summary”.
