US NONFARM PAYROLLS
The Nonfarm payrolls is one of the most important data releases and its always an important point of focus for the markets. The NFP influences currency, stock, metals and commodity movements as investors try to gauge what impact its publication might have on the wider economy. This month’s NFP report provides perspective on further moves on monetary policy and helps markets understand where the economy is heading in 2026.
- WHAT IS THE NFP AND WHY DOES IT MATTER
The Non-farm payrolls report is the release of official data on US jobs growth over the previous month measuring jobs added or lost. Its published by the US government’s Bureau of Labor Statistics, usually on the first Friday of each month. Traders look at these numbers released alongside the unemployment rate and average hourly earnings and try to work out what they are telling us about inflation pressures. Employment and inflation are two parts of the Federal Reserve’s mandate, which shapes its decision on whether to move on interest rates. Markets tend to react therefore when NFP results are released.
- AFTER GOVERNMENT SHUTDOWN, JOBS MARKET TIGHTENS AS AI REVOLUTION BEGINS TO BITE
Recent months have seen the labour market navigating a series of challenges. The US government shutdown from October 1st to November 12th disrupted federal hiring and delayed data collection, meaning that the markets had no up-to-date government figures on employment, inflation and other indicators. While this didn’t initially trouble the markets, since shutdowns have taken place before, this time a new record shutdown period was set. This caused major uncertainty and markets were concerned that the economy might be underperforming. However, more quietly other changes were also taking place. Companies have become cautious about expanding employment and instead are increasingly opting to invest in automation and using AI driven tools. Surveys show this has led to slower hiring in office roles in particular. As a result job additions have been falling, even though unemployment remains low.
- LATEST NFP FIGURES AND IMMEDIATE MARKET REACTION
On December 16th November’s Nonfarm Payrolls figures of 64k vs 40k expected were released, while unemployment data came in at 4.6% vs 4.5% expected. The higher NFP figure was mitigated by higher unemployment. The market reaction was broadly positive on the mixed data. Gold prices rose, silver prices hit a fresh all time high, while stock prices initially climbed and then pulled back. The data caused volatility, but did not alter current market expectations for rate movements next year. The markets are now looking forward to the publication of Thursday’s US CPI Inflation data, which is forecasted to remain at 3.0%.
- WHAT TRENDS MIGHT CONTINUE INTO 2026
NFP and inflation data impact a wide number of assets but throughout this year gold and stocks have shown a sensitivity to NFP releases. Stronger NFP numbers early this year reinforced expectations that interest rates would not come down as quickly as previously projected, which weighed on gold prices and pressured some stocks. More recently, softer labour reports have fueled rallies in stocks and helped push gold (and silver) prices to all time highs. Gold prices may have been more impacted by NFP figures with some of gold’s strongest weekly gains following slowing job numbers or easing wage growth. Stock reactions depend on the wider context. Weaker employment data can also spark recession fears, but recently softer employment has been interpreted as positive, since it increases the chances of further rate cuts. Current market expectations are that the Fed will cut rates between 1 and 2 times in 2026.
Conclusion
The US Nonfarm Payrolls report is a major indicator in global financial markets. In a year marked by government shutdowns, technological change and varying inflation, NFP data provides insight into how the US economy is doing. Its influence on gold prices, stocks and other assets is clear.
As the economy moves toward 2026, investors will continue to analyse each release for clues about the Fed’s next moves. Amid global uncertainty, the monthly jobs report helps us to understand where markets and the economy may be headed next.