Friday’s jobs report expected to show slowing payroll gains as concern rises about broader economy

With
signs
building
that
the
labor
market
is
at
least
slowing
if
not
something
worse,
the
June
nonfarm
payrolls
report
takes
on
added
significance.

Payroll
gains
so
far
in
2024
have
totaled
1.24
million,
down
about
50,000
a
month
below
the
same
period
a
year
ago.
Economists
surveyed
by
Dow
Jones
expect
the
report,
to
be
released
Friday
at
8:30
a.m.
ET,
to
show
growth
of
200,000,
down
from
the

272,000
reported
for
May.

In
historical
terms,
the
pace
of
job
gains
is
still
solid.
But
there
are
signs
bubbling
underneath
that
conditions
could
be
getting
softer
and
possibly
pointing
at
broader
economic
weakness
down
the
road.

“This
is
a
report
that’s
coming
at
a
point
where
there’s
a
little
more
uncertainty
about
the
economic
landscape
than
there
has
been
in
a
few
months,”
said
Nick
Bunker,
head
of
economic
research
at
the
Indeed
Hiring
Lab.
“Specifically,
I’m
thinking
more
about
the
unemployment
rate,
which
has
been
slowly
trending
up.”

The
jobless
level
in
May
did
nudge
higher
to
4%,
the
first
time
it
hit
that
threshold
since
January
2022,
up
from
3.7%

a
year
ago.
The
forecast
is
for
the
rate
to
hold
there.

Under
normal
circumstances,
a
4%
unemployment
rate
would
be
cause
for
celebration,
not
concern.
However,
what
is
catching
the
eye
of
some
economists
is
where
the
rate
is
now
compared
with
where
it’s
been
over
the
past
year.

The
May
rate
was
0.5
percentage
point
above
its
12-month
low
of
3.5%
in
July
2023,
potentially
triggering
a

recession
indicator
called
the
Sahm
Rule.
The
rule
has
shown
consistently
that
whenever
the
unemployment
rate
on
a
three-month
average
eclipses
its
12-month
low
by
half
a
percentage
point,
the
economy
is
in
recession.

While
there
are
scant
data
signs
that
a
recession
is
at
hand,
the
trend
in
unemployment
is
generating
some
attention.

“If
the
unemployment
rate
does
what
it’s
been
doing
for
the
last
bit
of
time
here
where
it’s
very
slowly
rising,
I
don’t
think
that
means
we’re
at
a
very
high
risk
of
triggering
a
Sahm
Rule
or
any
sort
of
unemployment
rate-based
measure
of
entering
recession,”
Bunker
said.
“That
being
said,
the
probability
of
that
happening
has
risen,
even
if
it’s
not
the
most
likely
outcome
right
now.”

The
economy
has
slowed
in
the
first
half
of
2024.
First-quarter
growth
as
measured
by
gross
domestic
product
rose
at
a

1.4%
annualized
pace,
while
the
Atlanta
Federal
Reserve
is
tracking
just
1.5%
growth
in
the

second
quarter.

There
are
also
lingering
inflation
concerns
that
could
keep
the
Fed
on
the
sidelines
for
a
while
longer
in
terms
of
lowering
interest
rates.

In
addition
to
the
headline
payroll
and
unemployment
numbers,
market
participants
and
economists
will
be
watching
several
other
key
metrics.

One
other
area
of
concern
has
been
the
divergence
between
the
nonfarm
payrolls
count,
as
taken
from
establishments
participating
in
the
Bureau
of
Labor
Statistics’
survey,
against
the
household
count
of
people
reporting
that
they’re
holding
jobs.

While
the
establishment
survey
has
shown
payrolls
increasing
by
about
2.8
million
over
the
past
12
months,
the
household
count,
which
is
used
to
calculate
the
unemployment
rate,
is
up
by
just
376,000.
Economists
generally
consider
the
establishment
survey
to
be
more
reliable
and
less
volatile
as
it
encompasses
a
larger
sample
size,
but
the
disparity
has
garnered
some
attention.

In
addition,
hours
worked
and
average
hourly
earnings
will
get
some
attention
as
gauges
of
inflation.

The
forecast
is
for
a
monthly
paycheck
gain
of
0.3%
and
a
12-month
increase
of
3.9%.
If
the
outlook
holds,
it
will
mark
the
first
time
that
the
annual
increase
is
below
4%
since
June
2021.