Luis Alvarez
The U.S. Department of Labor’s nonfarm payrolls report for June, due this Friday, is likely to be a mixed bag, with growth expected to continue but at a slower pace than prior months.
The report, which is the largest of the department’s several labor-related data reports, is likely to continue to see growth. Job openings climbed by 272K in May, outpacing the 182K expected and 165K in April.
However, the growth may see a cooldown, according to comments made by Federal Reserve Chair Jerome Powell on Tuesday. In a speech at a conference in Portugal, he said hiring has slowed down, and the unemployment rate has been edging up recently, although it remains at historically low levels. Bloomberg estimates a 195K increase in nonfarm payrolls in June and the unemployment rate to hold steady at 4%.
Powell said the labor market remains strong, but there has been a substantial move toward better balance in supply and demand. Other Fed officials also believe the job market is nearing an inflection point. Meanwhile, the Bloomberg estimates for June private payrolls is 160K, although Pantheon Economics expects just a 125K increase.
With inflation being the Federal Reserve’s main focus, the average hourly earnings data will also be important in the upcoming report. That is expected to rise 0.3% M/M and 3.9% on a Y/Y basis, vs. 0.4% M/M and 4.1% Y/Y respectively in the previous month. The labor force participation rate is expected to increase slightly to 62.6%, from 62.5% in May.
ADP’s take on private employment and the Challenger’s Job Cuts Report are also due tomorrow, providing greater clarity into what to expect in the Friday report. The consensus estimate for ADP employment figures is a 165K increase, up from a 152K rise earlier.