Nonfarm Payrolls is major Forex economic news in united states of america and it will volatile Forex market huge amount of money.
The non farm payrolls present the number of people on the payrolls of all no agriculture businesses. As this umber grows it means jobs are being created hence more persons having jobs. More jobs mean more people spending money which results in economic growth.
Now the non-farm payrolls present the number of people on the payrolls of all non agricultural businesses. The non-farm payrolls represent the total number of paid us workers of any business exclude in general government employees, private also employees, employees of nonprofit organizations, and farm employees. Okay. No as the non-farm payrolls number grows, it means jobs are being created and more people often jobs. more jobs mean more people spending money. which results in economic growth. Now, low unemployment also results in increased inflation. And this is because when unemployment is low, there is a shortage of labor available for businesses to hire. So, as businesses compete with one another for the available supply of labor, they raise the wages they are willing to pay. No because I labor costs eat into profit margins.
They raise the prices of their products. So, they raise the prices to come back. I labor costs. No, although high employment means there are more consumers that have money to inject into the economy. This increase is soon erased by higher prices. No because of increased prices, which is as a result of increased inflation. This results in a decline in purchasing poll. No, there are at least two related problems if wage rates gets High, businesses will respond by hiring fewer workers and unemployment will go up. No businesses could raise prices the concern increased labor costs. But if they charge higher prices, they won’t be able to sell as much of their products. And this is because higher prices will result in a decrease in demand because less consumers would be willing to pay higher prices. Now, because of reduced sales, they will cut back on iron and once again, unemployment will go up. So the only way the government can prevent this problem is by increasing interest rate.
Now what if the government tries to correct the situation by lowering interest rates or by injecting more money into the economy, say by cutting taxes are spending more money prices in general may go up? and this is because more money being pumped into the economy would result in more persons up in money which would result in increased consumer demand? Increase consumer demand would result in increased prices. And again, purchasing power with the client and inflation will increase So, so the only way to combat the increase in inflation caused by low unemployment is to raise interest rate. So this is one of the main reasons why the non farm payrolls is so important. This this announcement comes out first Friday in every month and every month there are a lot of traders that way to the non farm payrolls results to trade because a lot of persons actually predict the outcome of non farm payrolls with precision based on the weekly jobless claims the ADP reports the PMI, it’s a person’s use these data to give them a good estimation of what to expect for non farm payrolls. so in the next lecture, we’ll be looking at balance of trade.
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