Economics – Employment Reports

Generally the first Friday of each month the Labor Department releases two very significant economic numbers. Nonfarm Payrolls and the Unemployment Rate for the previous month are usually market moving pieces of news. This morning the Labor Department reported that December 2011 Nonfarm Payrolls grew by 200,000 which was higher than market expectations of 150,000 new jobs last month. Also the Unemployment Rate for December was announced at 8.5% which was better than 8.7% which was the average expectation of economists.

So why do these employment numbers get so much attention?

A couple of factors play into this. First, these numbers are released early in the month and are the first look at what the state of the economy was in the previous month. Today’s reports are the first pieces of data regarding December economic activity. Second, hiring occurs when businesses expect growth and are confident about this growth. Increasing the number of workers on your payroll increases your costs. An employer will only do this if they expect to grow their business to cover these added expenses.