Recently, I’ve noticed that many people are discussing how non-farm data affects the market, and it made me realize that many friends aren’t quite clear about the difference between the small non-farm and the big non-farm. Today, I’d like to share my understanding.

First, let’s talk about the small non-farm. Its full name is the ADP National Employment Report, which is published by ADP. This company mainly provides payroll processing services, so their data is basically based on the employment situation of their clients. The small non-farm is usually released on the first Wednesday of every month—two days before the big non-farm data comes out. Because it’s released early, many traders treat it as a leading indicator for the direction of the big non-farm report. That said, to be honest, the small non-farm’s authority is actually fairly general: it only covers employment changes in the private sector, and government-sector data isn’t included at all.

The real heavy hitter is the big non-farm data. This is the official non-farm employment report released by the U.S. Bureau of Labor Statistics (BLS), and it comes out on the first Friday of every month. The big non-farm data covers a much wider scope: it includes both the private sector and the government sector, reflecting the employment situation across the entire U.S. non-agricultural sector. The key indicators to watch are the number of jobs added, the unemployment rate, and average hourly earnings.

My own observation is that the small non-farm and the big non-farm often show discrepancies. The small non-farm is mainly for reference, while the big non-farm data is the most authoritative official employment indicator. The market reaction to the big non-farm data is usually much stronger. If the big non-farm data comes in above expectations, it suggests the economy is doing well, and U.S. stocks typically rise; on the other hand, if the data is worse than expected, investors may worry about an economic recession, and the stock market could face downward pressure in the short term.

So even though the small non-farm is released early and can give us some hints, its impact is actually limited. What truly moves the market is the big non-farm data. Each time before the big non-farm is released, the market enters a sensitive period, and traders are waiting to see how this official employment report will affect the direction of U.S. stocks. If you want to capture short-term trading opportunities, the moment the big non-farm data is released is usually the key time point.