CNN
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Economists don’t expect job gains to fall off a cliff when the Bureau of Labor Statistics releases employment data for June at 8:30 a.m. Friday.
Although total monthly employment is expected to show a gradual cooling, it is still forecast to be strong and steady: Economists expect the U.S. to have added 190,000 jobs last month, a pullback. A stronger-than-expected 272,000 gain in MayAnd FactSet consensus estimates expect unemployment to hold steady at 4%.
The U.S. labor market holds its own despite swirling forces — high inflation, an aggressive interest-rate hike campaign, pandemic fallout and geopolitical uncertainty — that are sure to trigger a recession.
Monthly job gains are coming in stronger than expected, and unemployment has been at or below 4% for 30 consecutive months.
That said, today’s job market is very different than it was 30 months ago.
Luke Tilley, chief economist at the Wilmington Foundation, told CNN that the labor market is back to normal, but “it’s going to be a concern if it gets worse from here.”
But data is mounting that shows the economy is slowing, consumer spending is cutting back and workers are feeling less secure. As such, Friday’s report could provide an important signal as to whether the jobs market is stable or at pre-pandemic levels — or weaker than advertised.
“As long as job gains show a gradual cooling, I think this economy is going to be in good shape,” ADP chief economist Nela Richardson told reporters Wednesday after the payroll processor’s latest report showed job and wage gains. Slowdown in the private sector.
ADP estimates that private employers added 150,000 jobs last month, up from 157,000 in May.
“If we see the cooldown go from gradual to steep, I think that’s a warning,” he said.
In May, the two surveys that feed into the monthly jobs report appeared to tell different stories: The business survey showed employers adding jobs at an even stronger pace, and the household survey showed a 408,000 drop in employment.
While the institutional survey is considered the “gold standard” by economists, the household survey, which feeds demographic and unemployment rates, is seen as more volatile due to its small sample size and declining response rates.
“Establishment and household surveys show starkly opposite pictures of the labor market,” Dean Baker, an economist and co-founder of the Center for Economic and Policy Research, wrote in a note published earlier this week.
“The persistence of this large difference is disconcerting,” he added. “Most of the other data seems to match the establishment survey better, although we see evidence that the labor market is weakening.”
It is noteworthy that there are Fewer job opportunities, hiring is held back, people don’t want to test the waters and stay in their current jobs; And, perhaps most importantly, layoff activity has been steadily rising in recent weeks.
Last week, 238,000 first-time claims for unemployment benefits were filed, up 4,000 from the previous week, according to Labor Department data released Wednesday. The latest rise brought the four-week average of initial claims to its highest level since August 2023.
Also, Americans are out of work longer: Continuity claims filed by people who received benefits for at least a week or more rose to their highest level since November 2021.
Continued uptick in claims, Delhi closely observes key data point in monthly jobs report: Persons unemployed due to unemployment.
“On a three-month average basis, that’s about 200,000 more than last year,” Tilley said. “The metric of permanent job losses, year-over-year, has never been positive in an expansion. It has never been positive between 2010 and 2019; it has never been positive between 2001 and 2008’s tech recession.
He added: “So, when you peel back the onion and look at what looks like very strong job growth in a raw number, look a little closer … it paints a picture of a labor market that has become normalized and is at risk of slipping.”
However, other measures of layoff activity did not show a worrisome spike.
US-based employers announced fewer job cuts last month than they did in May; However, those layoff reports are up from last year, according to data released Wednesday by Challenger, Gray & Christmas.
The Outreach and Workplace Research Institute counted 48,786 cutbacks announced in June. This is down almost 24% from the 63,618 cuts announced in May, but 19.8% more than the 40,709 cuts announced in June last year.
Since August 2022, monthly wage gains have averaged 250,000 per month, much faster than 2019’s average of 164,000, noted Julia Pollock, chief economist at ZipRecruiter.
“In other words, we’re experiencing very high job growth with the same unemployment rate at a time when the native-born population is stagnating,” Pollock told CNN via email. “A major reason is immigration and its effect on labor supply.”
Immigrants will account for 43% of labor force gains by 2024, Rachel Cederberg, senior economist at labor market research firm Lightcast, told CNN Business. In May, that share jumped to 280%, as immigrants outearned native-born workers who left the labor force, he said.
Immigrant employment has become another flashpoint in an already highly contentious presidential election. During last week’s CNN debate between President Joe Biden and former President Donald Trump, Mr The latter is said to be false All job gains since Biden took office Created by illegal immigrants and “bounce-back jobs.”
“Most research has not found that immigration affects employment opportunities for native-born Americans, because immigrants are both consumers and producers of goods and services, so they may increase job competition in some areas, but they also increase demand for goods and services, which creates jobs,” Pollock noted.
Average Hourly Earnings: Workers’ wage gains are slowing, and that is expected to continue in June. Economists expect monthly gains to be 0.3% from 0.4% in May and annual gains to 3.9% from 4.1%.
It’s an indicator of potential inflationary pressure that Federal Reserve officials are watching closely.
Fed Chairman Jerome Powell said Tuesday that the labor market has seen “pretty substantial movement” toward a return to a better equilibrium. Speaking at the ECB’s annual conference in Portugal, Powell noted that the unemployment rate was moving toward a “more stable level” as were wage increases.
“Wage increases are still a little bit higher, and they’re going to be balanced; nevertheless, you’re going to see the labor market cooling appropriately,” he said. “We’re watching it very carefully, but it doesn’t look like it’s heating up or posing a big problem for inflation.”
Labor force participation rates: While primarily working-age women have experienced record-high employment in recent months, other measures of labor force participation remain below pre-pandemic levels.
The overall labor force participation rate fell to 62.5% from 62.7% in May.
Part Time Employees: New data from the employment site indicates that employers are indeed Also need to hire part-time workers.
The number of involuntary part-time workers has increased in recent months.
According to Lightcast’s Sederberg, “They want full-time hours but can’t get them, which is an indicator of a softening labor market”. “That means the number of involuntary part-timers is still very low.”
This is a developing story and will be updated.
