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Dow Jones Industrial Average Index Return Rate vs. US Nonfarm Payroll Growth Rate
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DJIA Return Rate
Simultaneous Change
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DJIA Return Rate
Subsequent Change
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1% Rise in Nonfarm Payroll Growth Rate in 1 Yr
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1% Fall in Nonfarm Payroll Growth Rate in 1 Yr
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period, (from 5% to 6% for example) has typically been accompanied by a 1.12% Dow
Jones Industrial Average Index Return Rate decline during that year and a 1.47%
Dow Jones Industrial Average Index Return Rate decline the following year.
It also indicates that a 1% US Nonfarm Payroll Growth Rate decline over a 12 month
period, (from 5% to 4% for example) has typically been accompanied by a 1.23% Dow
Jones Industrial Average Index Return Rate increase during that year and a 1.68%
Dow Jones Industrial Average Index Return Rate increase the following year.
The center column shows the change in the Dow Jones Industrial Average Index
Return Rate over 12 months, depending on whether the period experienced a rising
or falling US Nonfarm Payroll Growth Rate. The right column shows the change in the
Dow Jones Industrial Average Index Return Rate during the year following an increase
or decrease in the US Nonfarm Payroll Growth Rate.
The data history in the middle column shows a strong tendency for the two
rates to move inversely to each other during the same time period.
The evidence for using the previous 12 month change in the US Nonfarm
Payroll Growth Rate to predict the future direction of the Dow Jones
Industrial Average Index Return Rate is strong (right column). However, the
direction of the rates are inversely related to each other. A change in the US
Nonfarm Payroll Growth Rate suggests that the Dow Jones Industrial
Average Index Return Rate will move in the opposite direction of the US
Nonfarm Payroll Growth Rate.
Annual rates are shown in the graph and calculations.
How Do I Use This Information?
There are many investment theories that are well publicized in the financial press.
Even though little or no historical data may be offered as evidence for such theories,
many investors use them subconsciously, if not intentionally.
Example Theories: Rising Inflation is bad for the stock market. A booming housing
market is good for the S&P 500 stock index. A falling fed funds rate means that long
term interest rates will fall.
There are many such theories. In this site, long term investment and economic data
is tested against decades to determine whether a relationship actually exists or not.
This historical correlation provides a vital aid in interpreting the often confusing
behavior of the financial markets. The perspective gained may be the difference
between staying the course or being blown and tossed by every investment theory
that is popular at the moment. What the majority assumes to be true, often is not. In
the final analysis, readers are admonished to follow the evidence, wherever it leads.
This page tests the relationship between the US Nonfarm Payroll Growth Rate and the
Dow Jones Industrial Average Index Return Rate. Suppose you are making a
business or investment decision. Suppose again that the decision hinges on whether
the US Nonfarm Payroll Growth Rate and the Dow Jones Industrial Average Index
Return Rate tend to move in the same or opposite directions. The data, graphs, and
analysis above will enlighten you. You'll discover whether they move with, inversely to,
or independently of each other.
Suppose that the US Nonfarm Payroll Growth Rate has risen sharply and that you
need to know what direction the Dow Jones Industrial Average Index Return Rate is
headed in the near future. Does the recent increase in the US Nonfarm Payroll
Growth Rate provide a clue about the future direction of the Dow Jones Industrial
Average Index Return Rate? The data history, graph, and analysis above will show
you how the Dow Jones Industrial Average Index Return Rate has performed after
increases in the US Nonfarm Payroll Growth Rate. You'll see if one indicator has been
likely to signal a change in another. This is not intended as a prediction, but merely
as a clue to the future from the annals of history. No man knows the future, unless he
has the ability to control the future.
This site compares data series for interest rates, stock indexes, economic indicators,
currency exchange rates and real estate values. Suppose that you want to see how
stock indexes are influenced by interest rates or the value of the dollar. Click one of
the stock index links on the right side of any page. Links to our multi-series graphs
and correlation analysis may be found at the bottom-center of the stock index pages.
Formula for periods with a rising US Nonfarm Payroll Growth Rate:
1) Change in the Dow Jones Industrial Average Index Return Rate DURING periods
with a rising US Nonfarm Payroll Growth Rate:
The abbreviated formula is: (Dow Jones Industrial Average Index Return Rate Change
/ US Nonfarm Payroll Growth Rate Rise) x 1% = Published Rate.
The complete formula is: [(Average change in the Dow Jones Industrial Average Index
Return Rate over all rolling 12 month periods with a rising US Nonfarm Payroll Growth
Rate) / (Average Rise in the US Nonfarm Payroll Growth Rate over the same 12
month periods)] x 1% = Published Rate.
2) Change in the Dow Jones Industrial Average Index Return Rate AFTER a rising US
Nonfarm Payroll Growth Rate:
The abbreviated formula is: (Subsequent Dow Jones Industrial Average Index Return
Rate Change / US Nonfarm Payroll Growth Rate Rise) x 1% = Published Rate.
The complete formula is: [(Average change in the Dow Jones Industrial Average Index
Return Rate during the 12 months following any rolling 12 month base period with a
rising US Nonfarm Payroll Growth Rate) / (Average Rise in the US Nonfarm Payroll
Growth Rate over the 12 month base periods)] x 1% = Published Rate.
Formula for periods with a declining US Nonfarm Payroll Growth Rate:
1) Change in the Dow Jones Industrial Average Index Return Rate DURING periods
with a declining US Nonfarm Payroll Growth Rate:
The abbreviated formula is: (Dow Jones Industrial Average Index Return Rate Change
/ US Nonfarm Payroll Growth Rate Decline) x -1% = Published Rate.
The complete formula is: [(Average change in the Dow Jones Industrial Average Index
Return Rate over all rolling 12 month periods with a declining US Nonfarm Payroll
Growth Rate) / (Average decline in the US Nonfarm Payroll Growth Rate over the
same 12 month periods)] x -1% = Published Rate.
2) Change in the Dow Jones Industrial Average Index Return Rate AFTER a
decreasing US Nonfarm Payroll Growth Rate:
The abbreviated formula is: (Subsequent Dow Jones Industrial Average Index Return
Rate Change / US Nonfarm Payroll Growth Rate Decrease) x -1% = Published Rate.
The complete formula is: [(Average change in the Dow Jones Industrial Average Index
Return Rate during the 12 months following any rolling 12 month base period with a
declining US Nonfarm Payroll Growth Rate) / (Average decline in the US Nonfarm
Payroll Growth Rate over the 12 month base periods)] x -1% = Published Rate.
Rolling 12 Month Periods Defined:
Overlapping 12 month periods in a monthly data base.
For example:
In the 24 month period included in 2000 - 2001, there are 13 complete rolling 12
month periods. The first is January, 2000 - December, 2000. The second is February,
2000 - January, 2001. The third is March, 2000 - February, 2001 and so on. The last
complete rolling 12 month period in the 2000 - 2001 period is January, 2001 -
December, 2001.
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