Part III. Fundamental Analysis / Chapter 10. Labor Market Indicators

One of the most important macroeconomic indicators is the state of the labor market, which receives close attention as it is a key factor in the overall condition of the economy. Institutions specializing in socio-economic statistics are responsible for analyzing employment, and significant resources are invested in data collection and analysis on employment and unemployment. Investors focus on indicators such as:

• Unemployment Rate;
• Number of employees determined by payrolls, excluding agricultural workers (Nonfarm Payrolls);
• Average working week (Average Workweek);
• Labor market statistics (Employment Situation);
• Self-employment ( (Household Employment);
• Index of labor demand (Help-Wanted Index);
• Applying for unemployment benefits (Jobless Claims);
• Initial Jobless Claims (Initial Jobless Claims).

The Unemployment Rate is an indicator that reflects the percentage of unemployed individuals compared to the labor force. Unemployed individuals are considered those who are actively seeking employment and are of working age. Data for this indicator is collected on the 12th day of each month through surveys conducted with 60,000 households and 375,000 businesses. An increase in the number of unemployed individuals indicates unfavorable economic conditions and can cause concerns among the population, leading to a decrease in disposable income. The Unemployment Rate is an important measure that provides insights into the state of the economy and its impact on the labor market.

The Unemployment Rate is considered an indicator of inflationary pressure based on wage increases. When the unemployment rate is low, wages tend to increase more rapidly. This indicator can have a significant impact on the market. When interest rates rise, a decrease in the unemployment rate can lead to an appreciation in the currency exchange rate. Data on the unemployment rate is published at 16:30 Moscow time on the first Friday of each month, along with the Nonfarm Payrolls report.

Nonfarm Payrolls represents the change in the number of employed individuals in non-farm activities, excluding agricultural workers. The data is collected across 500 industry sectors, excluding the agricultural sector, with a sample size of 340,000 establishments. The Bureau of Labor Statistics collects data on employee compensation, employment levels, and working hours from these establishments. Nonfarm Payrolls is referred to as a "market-moving indicator" because an increase in its value leads to an appreciation of the currency exchange rate.

The Nonfarm Payrolls indicator is often used as a crucial determinant of the inflationary level and, consequently, the potential increase in interest rates. An increase of 200,000 in the monthly Nonfarm Payrolls figure is considered equivalent to a 3% increase in GDP. In analysis, Nonfarm Payrolls data is used in conjunction with indicators such as the Unemployment Rate, Hourly Earnings, and Average Workweek. Usually, the direction of Nonfarm Payrolls and other unemployment indicators diverges because Nonfarm Payrolls excludes the agricultural sector. However, in practice, the indicators can rise simultaneously, indicating an increase in unemployment due to the agricultural sector. Simultaneous decreases in these indicators reflect negative trends in the manufacturing industry. Reports on Nonfarm Payrolls are published monthly on the first Friday of the month at 16:30 Moscow time.

The Average Workweek measures the duration of the workweek over the course of a month. It is considered a supplementary indicator that has minimal influence on the market. However, for indicators such as Industrial Production and Personal Income, the Average Workweek becomes a determining factor. Data is published on the first Friday of the month at 16:30 Moscow time.

The Employment Situation report includes two components: household survey (60,000 households) and establishment survey (375,000 government agencies and commercial organizations). The reports provide data on various aspects of the labor market, including the duration of the workweek, employment in nonfarm sectors, average hourly earnings, and average workweek. The reports are released on the first Friday of the month at 16:30 Moscow time.

Household Employment measures self-employment, including individuals who receive wages or are engaged in their own businesses (self-employed) and individuals who are not working for valid reasons (such as vacation, illness, or labor dispute) but have a job or business. Data for this indicator is collected through surveys of 60,000 individuals, including self-employed individuals and workers in the agricultural sector.

Help-Wanted Index reflects the strength of the labor market by measuring the number of job advertisements. The data for this index is published in the country's 51st largest newspaper. A high value of the Help-Wanted Index indicates a labor shortage, which can lead to wage increases to attract workers and potentially contribute to inflation. While this index can be useful for analyzing regional labor market conditions, it has little practical impact on the overall market. The data is published at 18:00 Moscow time on the last Thursday of the month.

Jobless Claims provide information on the number of unemployed individuals and reflect changes in the number of claims for unemployment benefits filed during the week. Jobless Claims can be influenced by local and federal holidays or other short-term factors. This indicator gives insight into the future value of the Nonfarm Payrolls indicator. For example, if Jobless Claims decrease consistently throughout the month, it suggests an increase in Nonfarm Payrolls. A decrease in the number of claims for unemployment benefits is favorable for currency appreciation. The data is published at 16:30 every Thursday.

Initial Jobless Claims measure the weekly change in the number of individuals filing initial claims for unemployment benefits. This indicator is strongly influenced by seasonal factors, leading to frequent revisions. In practice, analysts often consider the four-week moving average of this indicator to assess the overall trend. The data is published at 16:30 every Thursday.

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