Key Takeaways
- Measures net increase in nonfarm payroll jobs.
- Key indicator of labor market and economy.
- Informs Federal Reserve's employment policies.
What is Jobs Growth?
Jobs growth measures the net increase in nonfarm payroll employment, reflecting how many new jobs are added minus those lost in a given period. It is a vital economic indicator tracked monthly by the U.S. Bureau of Labor Statistics through surveys like the Current Employment Statistics (CES), helping you gauge labor market health and economic momentum.
This measure influences decisions in earnings forecasts and broader economic analysis, making it a key metric for investors and policymakers alike.
Key Characteristics
Jobs growth is characterized by several important features that help you understand labor market dynamics quickly:
- Monthly Reporting: Data is published monthly, showing net job additions across industries and demographics.
- Nonfarm Payroll Focus: Excludes agricultural and self-employed jobs, concentrating on the core employment sectors.
- Firm Size Impact: Small firms (under 500 employees) contribute roughly two-thirds of net job creation, highlighting the importance of business size.
- High-Growth Firms: A small percentage of firms drive a large share of job gains, often including companies with rapid expansion or established firms with over 100 employees.
- Economic Correlation: Jobs growth closely aligns with GDP trends and consumer spending patterns, making it a coincident indicator of economic health.
How It Works
Jobs growth is derived by subtracting gross job losses from gross job gains, with data collected primarily via employer surveys. You can track employment trends across industries, age groups, and other demographics, which helps identify where economic momentum is strong or weakening.
Policymakers use these trends to inform decisions, such as adjusting interest rates to support maximum employment. Investors and analysts often combine jobs growth data with data analytics to forecast market conditions and adjust portfolios accordingly.
Examples and Use Cases
Jobs growth data applies broadly across sectors and investment strategies, offering practical insights:
- Airlines: Companies like Delta and American Airlines rely on jobs growth trends to plan staffing and capacity, reflecting travel demand fluctuations.
- Investment Selection: Understanding jobs growth can guide your choices in best growth stocks and best large-cap stocks, which often perform well in strong labor markets.
- Economic Forecasting: Analysts use jobs growth alongside concepts like the J-curve effect to anticipate economic recoveries or slowdowns.
Important Considerations
While jobs growth is a powerful indicator, it excludes certain employment types such as farm workers and the self-employed, so it should be combined with other data for a full labor market picture. Additionally, monthly figures are subject to revisions, requiring cautious interpretation.
To enhance your analysis, consider pairing jobs growth data with broader market tools like best ETFs or best low-cost index funds to balance exposure and capitalize on economic trends.
Final Words
Jobs growth signals the economy's health by reflecting hiring trends and business confidence. Monitor monthly reports to gauge momentum and adjust your financial plans accordingly.
Frequently Asked Questions
Jobs growth measures the net increase in nonfarm payroll employment, primarily tracked monthly by the U.S. Bureau of Labor Statistics through surveys like the Current Employment Statistics and Current Population Survey. It reflects the difference between job gains from business expansions and job losses from contractions or closures.
Jobs growth acts as a key indicator of labor market health and overall economic performance. Strong job growth signals business confidence and supports consumer spending, while slowdowns often warn of weakening economic conditions and potential rises in unemployment.
Small firms with fewer than 500 employees are responsible for about two-thirds of net jobs created, according to quarterly data from the Business Employment Dynamics program. These businesses play a crucial role in driving employment gains in the economy.
Jobs growth data is central to Federal Reserve decisions aimed at promoting maximum employment, one of its core mandates. Policymakers use hiring trends to adjust interest rates and stimulate economic growth, especially following recessions.
Jobs growth and unemployment rates are inversely related; strong job growth corresponds with low unemployment, indicating a robust labor market. Conversely, slowing job growth or job losses often precede rises in unemployment and reduced consumer spending.
In 2025, U.S. hiring slowed down mid-year, with monthly job additions averaging 12,000 compared to 123,000 earlier in the year. Despite this slowdown, persistent job openings near 7.1 million suggest the market is approaching equilibrium with stable layoffs.
High-growth firms, which represent about 2% of all businesses, drove 35% of gross job gains between 2009 and 2012. These firms often include established companies with over 100 employees or small, rapidly expanding young firms.
The U.S. Bureau of Labor Statistics publishes jobs growth data in the Employment Situation Summary, using surveys like the CES for payroll employment and CPS for labor force participation. Additionally, the JOLTS report tracks job openings to gauge labor market balance.
