Employment announcements report on the number of new jobs that have been created in an economy and the percentage of workers who are unemployed. The employment announcements rank right up there with interest-rate announcements in terms of importance.
Employment data are released in multiple announcements every month. Here are the ones you are going to want to pay attention to (in order of importance):
- Nonfarm payrolls: The number of new jobs not related to farming that were created during the previous month.
- Unemployment rate: The percentage of the population that is actively looking for work but has been unable to find it.
- Weekly initial unemployment claims: The number of people who applied for unemployment benefits for the first time during the previous week.
- ADP National Employment Report: The number of new jobs that are not related to farming that were created during the previous month, according to payment-processing company ADP. This number is released two days before the official nonfarm payrolls number Irom the Bureau of Labor Statistics (BLS).
Impact on Trade Flows
Rising Unemployment -> Less Money in Consumers’ Pockets ->Decreased Demand for Imports
Falling Unemployment -> More Money in Consumers’ Pockets->Increased Demand for Imports
Impact on Investment Flows
Rising Unemployment -> Central Bank Lowering Interest Rates to Stimulate the Economy –> Lower-Yielding Government Debt Market Decreased Investment Flows
Declining Unemployment –> Central Bank Raising Interest Rates to Prevent the Economy From Overheating Higher-Yielding Government Debt Market -> Increased Investment Flows
Impact on Money Supply
Rising Unemployment -> Central Bank Lowering Interest Rates to Stimulate the Economy Increase in the Money Supply
Declining Unemployment -> Central Bank Raising Interest Rates to Prevent the Economy From Overheating Decrease in the Money Supply
Impact on Investor Fear
Rising Unemployment -> Nervous Investors
Declining Unemployment -> Confident Investors
Typical Impact on the Currency
Rising Unemployment -> Weaker Currency
Falling Unemployment -> Stronger Currency