- Nonfarm payrolls forecast to increase by 110,000 in June
- Unemployment rate estimated to rise to 4.3% from 4.2%
- Average hourly earnings likely to jump 0.3%; up 3.9% on year-over-year basis
WASHINGTON, July 3 (Reuters) – The U.S. labor market likely slowed further in June, with the unemployment rate expected to have edged up to more than a 3-1/2-year high of 4.3%, as economic uncertainty stemming from the Trump administration’s policies curbed hiring.
The anticipated moderation in job growth will probably be insufficient to spur the Federal Reserve to resume its interest rate cuts in July, with the Labor Department’s closely watched employment report on Thursday also expected to show solid wage gains last month.
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The report is being published early because of the Independence Day holiday on Friday. A string of indicators, including the number of people filing for state jobless benefits and receiving unemployment checks, has pointed to labor market fatigue after a strong performance that shielded the economy from recession as the U.S. central bank aggressively tightened monetary policy to combat high inflation.
Economists say President Donald Trump’s focus on what they call anti-growth policies, including sweeping tariffs on imported goods, mass deportations of migrants and sharp government spending cuts, has changed the public’s perceptions of the economy. Business and consumer sentiment surged in the wake of Trump’s victory in the presidential election last November in anticipation of tax cuts and a less stringent regulatory environment before slumping about two months later.
“It’s a very uncertain time,” said Martha Gimbel, executive director of the Budget Lab at Yale University. “It’s just hard for people to make decisions right now.”
Nonfarm payrolls likely increased by 110,000 jobs last month after rising by 139,000 in May, a Reuters survey of economists showed. That reading would be below the three-month average gain of 135,000. Estimates ranged from a rise of 50,000 to 160,000 jobs. Average hourly earnings are forecast to jump 0.3% after advancing 0.4% in May. That change would keep the annual increase in wages at 3.9%.
Economists estimate the economy needs to create between 100,000 and 170,000 jobs per month to keep up with growth in the working-age population. They will be watching for revisions to the April and May data. Revisions this year have been skewed to the downside. Some economists speculated that small businesses were filing late responses to the establishment survey, from which the nonfarm payrolls are derived.00:19S&P 500, Nasdaq end higher on Vietnam trade deal, tech stocks
“Whatever the cause of the revisions, the established pattern means it makes sense to subtract about 30,000 from the first estimate of June payrolls and to focus on the trend rather than one month’s numbers,” said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics.
Much of the slowdown in job growth reflects tepid hiring. Layoffs remain fairly low, with employers generally hoarding workers following difficulties finding labor during and after the COVID-19 pandemic.
RISING LAYOFFS
But layoffs are picking up and the lackluster hiring means fewer opportunities for those who lose their jobs, accounting for the anticipated uptick in the unemployment rate.
A survey from the Conference Board last week showed the share of consumers who viewed jobs as being “plentiful” dropped to the lowest level in more than four years in June.
