Key Takeaways
- US payrolls likely grew by 190,000 in June, down from May’s 272,000.
- Average hourly earnings projected to rise 3.9%, the smallest increase in three years.
- Job openings may fall below 8 million, indicating easing labor market pressures.
What Happened?
US employers likely scaled back hiring in June, with payrolls projected to increase by about 190,000, according to a Bloomberg survey. This marks a significant drop from the 272,000 jobs added in May.
The jobless rate is expected to hold steady at 4%, while average hourly earnings are projected to climb just 3.9% year-over-year, the smallest annual increase in three years. Recent data, including declining vacancies and higher weekly jobless claims, suggest a cooling but resilient labor market.
Why It Matters?
You may wonder why these shifts are crucial. For one, moderating job growth and wage increases could be favorable for Jerome Powell and the Federal Reserve as they seek confirmation that inflation is slowing. More available workers allow companies to step back from steep pay hikes, reducing inflationary pressures.
Investors should pay attention to Powell’s comments at the European Central Bank’s forum in Sintra for clues on future interest rate cuts. Christine Lagarde, Powell’s euro-area counterpart, will also provide insights that could impact global markets.
What’s Next?
Looking ahead, investors should watch for the official jobs report on Friday and Powell’s remarks in Portugal. Another key report will likely show job openings falling below 8 million for the first time since early 2021, suggesting companies are having greater success filling positions.
This trend could further ease wage pressures and support the Fed’s case for eventually lowering interest rates. Additionally, pay attention to international data like China’s PMI and euro-zone inflation, which could influence global economic conditions and market behavior.
