June Jobs Report Forecasts Predict Continued Health but More Moderate Hiring Gains

The June jobs report is anticipated to display a steady increase in employment, with an estimated addition of 190,000 jobs, according to FactSet’s consensus estimate. This number is a decrease from the 272,000 jobs added in May. The unemployment rate is projected to remain steady at 4%. A potential sign of easing inflation could be a decrease in hourly earnings growth to 0.3% in June, from 0.4% in May, while year-over-year earnings growth is expected to decrease from 4.1% to 3.9%.

Economists interpret the jobs report as an indication of the economy’s growth and the tightness of the labor market. Bill Adams, chief economist at Comerica Bank, anticipates that the solid employment growth of the past year signals an economy expanding and not on the verge of recession. The unemployment rate is also a key factor in determining the jobs market’s tightness.

Analysts from different firms have made various predictions for the June jobs report. Goldman Sachs anticipates 140,000 new jobs and the unemployment rate staying steady at 4%, while UBS forecasts 165,000 new jobs and a drop in the unemployment rate to 3.9%.

Divergences in employment data may occur due to the fact that the employment data comes from two different sources – a survey of firms and a household survey. These discrepancies could be attributed to the difficulty in including recent immigrants in the household survey.

If the June jobs report aligns with expectations, it would signify a slowly cooling economy as desired by the Federal Reserve. This implies that, absent any major surprises, there is unlikely to be any significant policy changes. However, there are two scenarios that could influence the Federal Reserve’s decision-making process. First, if the unemployment rate significantly exceeds the predicted 4.4%, it could signal a recession based on the Sahm rule. Second, if average hourly earnings significantly surpass the forecast, it may indicate an inflationary signal, prompting the Federal Reserve to exercise more caution in cutting rates.

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