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May jobs report expected to show more signs of cooling job market
The May employment report is expected to show further signs of a cooling in the labor market.
The Bureau of Labor Statistics’ monthly report, scheduled to be released at 8:30 a.m. ET on Friday, is expected to show that nonfarm payrolls increased by 185,000 in May, while the unemployment rate remained steady at 3.9% from the previous month, according to consensus. estimates compiled by Bloomberg. In April, the US economy added 175,000 jobswhile the unemployment rate unexpectedly rose to 3.9%.
Here are the key numbers Wall Street will look at compared to the previous month, according to Bloomberg data:
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Non-Farm Payrolls: +185,000 vs. +175,000 previously
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Unemployment rate: 3.9% vs. 3.9% previously
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Average hourly earnings, month over month: +0.3% vs. +0.2% previously
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Average hourly earnings, year over year: +3.9% vs. +3.9% previously
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Average weekly hours worked: 34.3 vs. 34.3 previously
The report comes as the stock market reached records amidst a series of weaker than expected economic data, which increased investor confidence that the Federal Reserve could reduce interest rates from September onwards. Entering Friday’s release, markets are pricing in a 67% chance that the Fed will cut rates in September, up from the roughly 50% chance seen a week ago. according to the CME FedWatch tool.
See more information: What the Fed’s Rate Decision Means for Bank Accounts, CDs, Loans and Credit Cards
The key question in Friday’s report and throughout the rest of 2024 will be whether slowdown in monthly job growth It’s just a sign of normalization in the labor market or the first signs of a broader economic slowdown. For now, economists believe Friday’s print will support the former.
“The May payrolls print will likely show a healthy but more balanced labor market,” Bank of America U.S. economist Michael Gapen wrote in a research note in anticipation of the release. “In addition, the report will likely provide evidence that the ‘catch-up’ effect on hiring is fading. Whether the Fed can ease policy this year will depend on its confidence in inflation.”
In general terms, other data released this week reflected a labor market still resilient this is showing more signs of normalizing to pre-pandemic levels. O latest survey on job vacancies and labor turnover (JOLTS), released on Tuesday, showed that job openings fell in April to the lowest level since February 2021.
In particular, the ratio between the number of job vacancies and unemployed people returned to 1.2 in May, which is in line with pre-pandemic levels.
Wages data will once again be a closely watched part of Friday’s release, as consistently high wage growth could contribute to sticky inflation. In April, annual wage growth fell below 4% for the first time in nearly three years.
The story continues
See more information: How does the job market affect inflation?
Economists expect wage growth to accelerate slightly on a monthly basis in May, rising 0.3% compared to April’s 0.2% increase. Expectations are that annual wage growth will remain stable at 3.9%.
“A gradual slowdown in trend job growth and a slowdown in nominal wage growth is what the Fed intends,” Oxford Economics chief U.S. economist Ryan Sweet wrote in a note to clients.
An American flag flies from a crane as a construction worker helps build a mixed-use apartment complex on January 25, 2024, in Los Angeles, California. (Mario Tama/Getty Images) (Mario Tama via Getty Images)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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