What to look for in the US government’s June jobs report?

A key government report due Friday is expected to show job growth slowed but steadily in June, with forecasters increasingly confident that the U.S. economy is headed for a “soft landing.”

Recent economic signals suggest that the labor market is returning to normal:

• The country’s unemployment rate has remained at or below 4% for 30 consecutive months.
• Average payroll gains are projected at 277,000 jobs in 2024, compared to 251,000 jobs the year before and 165,000 jobs in 2019, before the pandemic hit the economy in 2020.
• Job openings, while still higher than in 2019, are trending downward in what economists say is a more typical balance between demand from employers and the number of workers available.
• Companies have announced plans to cut nearly 435,000 jobs this year — a 5% drop from the same period in 2023, according to Challenger, Gray & Christmas.
• Wage pressures continue to ease, giving companies more room to cut prices.

What are you looking for

Meteorologists are looking for signs that the pace of hiring is slowing, consistent with slowing inflation but not falling off the cliff, which would raise fears of a sharp recession.

Analysts polled by FactSet expected employers to add 192,000 jobs last month, compared with 192,000 in the prior month. 272 thousand in MayA sharp slowdown in hiring in June compared with earlier this year would confirm that the economy is headed for a slowdown, as the Fed hopes. Starting in 2022, the Fed has raised interest rates to their highest levels in decades in an attempt to curb growth and curb inflation.

The unemployment rate in June is expected to remain steady at 4%, indicating steady job growth. To that end, Elise Gold, an economist at the Economic Policy Institute, noted in a report that the youth unemployment rate is now on par with what it was before the pandemic.

Monthly wage growth is also expected to slow in June to 0.3%, down from 0.4% the previous month, in line with other recent data suggesting that Inflation is gradually fading away..

When will the US Federal Reserve cut interest rates?

The Fed’s main challenge in getting the economy back to health after the pandemic has been to help balance the supply of and demand for workers without tipping the economy into recession. So far, the central bank has largely defied critics who predicted that aggressive monetary tightening would lead to a collapse.

“The labor market has proven the skeptics wrong,” said Andrew Flowers, chief economist at Upcast, which uses technology to help companies hire workers.

Speaking in Sintra, Portugal, this week, Federal Reserve Chairman Jerome Powell said: He said Inflation is slowing again after flaring up earlier this year, the Associated Press reported. The personal consumption expenditures index — a key indicator closely watched by the Federal Reserve — fell in May Annual growth slows to three-year lowincreasing the chances of the central bank cutting interest rates by the end of the year.

But that doesn’t mean policymakers are ready to back off in the fight against inflation. Powell stressed that central bankers still need to see more data showing annual price growth is slowing to near the Fed’s 2% annual target, and warned that cutting interest rates too soon could reignite inflation.

“We just want to understand that the levels we’re seeing are a real reading of core inflation,” Powell said.

Most economists believe Fed officials will keep interest rates on hold when they meet in late July, while they see a quarter-point rate cut in September as likely.

“The Fed has become more alert to downside risks to the labor market, which strengthens our confidence in the prospects for the first rate cut of this easing cycle in September,” said Ryan Sweet, chief U.S. economist at Oxford Economics. Oxford Economics also expects another rate cut from the Fed in December.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, expects a quarter-point rate cut in September. That could be followed by deeper cuts in November and December, but only if the labor market weakens more than the Fed currently expects.