Recently, someone asked me how to understand the difference between the small Non-Farm Payrolls and the large Non-Farm Payrolls. So, I’ll explain it clearly for everyone.

First, let’s talk about the small Non-Farm Payrolls, officially called the ADP National Employment Report. This report is released by ADP, a company mainly engaged in payroll processing, so the data comes from their clients. The small Non-Farm Payrolls are usually announced on the first Wednesday of each month, two days earlier than the big Non-Farm Payrolls. Because it’s released early, many investors treat it as a reference for predicting the big Non-Farm Payrolls. However, note that the small Non-Farm Payrolls only count employment in the private sector; government employment is not included.

The big Non-Farm Payrolls are different. They are official data released by the U.S. Bureau of Labor Statistics, typically on the first Friday of each month. The big Non-Farm Payrolls cover employment changes across all non-agricultural sectors, including both private and government sectors, making the data more comprehensive. It reflects key indicators such as new jobs added, unemployment rate, and average hourly earnings, and is one of the most important economic indicators in the U.S.

What’s the biggest difference between the two? The small Non-Farm Payrolls are based on ADP’s payroll data, which has a limited coverage and often deviates from the big Non-Farm Payrolls. The big Non-Farm Payrolls are official authoritative data, and the market pays much more attention to it than to the small Non-Farm Payrolls. Simply put, the small Non-Farm Payrolls are more of a reference, while the big Non-Farm Payrolls are the real decision-maker.

In terms of market impact, after the small Non-Farm Payrolls are released, the market may adjust its expectations for the big Non-Farm Payrolls based on the data, causing short-term volatility but with limited overall impact. The big Non-Farm Payrolls, on the other hand, have a much more direct influence on U.S. stocks. If employment data exceeds expectations, it indicates a strong economy, and stocks usually rise; if the data falls short, investors may worry about a recession, and stocks tend to decline.

So, in simple terms, among the Non-Farm Payrolls data, the small Non-Farm Payrolls is the scout, and the big Non-Farm Payrolls is the decision-maker. Traders and investors pay close attention to the release dates of these reports because both have a profound impact on Federal Reserve monetary policy and market trends.