The U.S. Bureau of Labor Statistics will release June non-farm employment data at 20:30 tonight. Economists do not believe that job growth will fall off a cliff.

While monthly job growth is expected to cool, it is still expected to remain strong: Economists expect the U.S. to add 190,000 nonfarm payrolls last month, a pullback from a stronger-than-expected 272,000 jobs in May. The unemployment rate is expected to hold steady at 4%, according to FactSet consensus estimates.

Economists also expect the month-on-month increase in average hourly earnings to slow to around 0.3% from 0.4% in May and to 3.9% from 4.1% year-on-year. This is an indicator of potential inflationary pressures that Federal Reserve officials closely watch. Federal Reserve Chairman Jerome Powell said on Tuesday that the unemployment rate is returning to a "more sustainable level" and so is wage growth.

“Wage growth is still a little bit above where it would be in equilibrium; but despite that you can see the labor market is cooling modestly,” he said.

“We are watching the job market very carefully, but it doesn’t look like it’s overheating or causing big problems for inflation.”

While a combination of factors, including high inflation spurring aggressive interest rate hikes by the Federal Reserve, the aftershocks of the pandemic and geopolitical uncertainty, seem certain to trigger a recession, the U.S. labor market remains solid, with monthly job creation often stronger than expected and the unemployment rate remaining at or below 4% for 30 consecutive months.

That said, the current U.S. job market is very different from what it was 30 months ago. "The labor market has normalized," Luke Tilley, chief economist at Wilmington Trust, said in an interview. But he warned, "The concern is whether things will get worse from here."

But as more data shows the economy is slowing, consumer spending is slowing and workers are increasingly insecure, Friday's nonfarm payrolls could provide a key signal about whether the job market is stabilizing, even returning to pre-pandemic conditions, or is weaker than the data suggests.

“I think as long as job growth continues to trend toward just a gradual cooling, the economy is in good shape,” ADP chief economist Nela Richardson said Wednesday. But “if we see the pace of cooling (in the job market) go from gradual to steep, I think that’s a warning,” she said.

Would the two investigations still tell different stories?

Two surveys in the May jobs report appeared to tell different stories: The business survey showed employers adding jobs at a still-strong pace, while the household survey showed payrolls fell by 408,000.

While establishment surveys are considered the “gold standard” by economists, household surveys provide more detailed information about demographics and are also reflected in the unemployment rate, although they are seen as more volatile due to smaller sample sizes and lower response rates.

“The business and household surveys continue to show diametrically opposed labor market conditions,” Dean Baker, an economist and co-founder of the Center for Economic and Policy Research, wrote in a report released earlier this week. “The persistence of this large divergence is troubling,” he added. “While we see evidence of labor market slack, most other data appear to be more consistent with the agency surveys.”

Notably, job openings are down, hiring is down, people are staying in their current jobs and, perhaps most importantly, layoffs have been rising steadily in recent weeks.

How do immigrants contribute to the U.S. labor market?

Julia Pollak, chief economist at ZipRecruiter, noted that nonfarm payrolls have averaged 250,000 per month since August 2022, which is much faster than the average of 164,000 in 2019.

“In other words, we’ve had higher job growth at roughly the same unemployment rate while the native-born population has stagnated,” Pollack said. “A key reason for this is immigration and its effect on the labor supply.”

A senior economist at labor market research firm Lightcast said immigrants will account for 43% of U.S. labor force growth through 2024. In May, that share surged to 280%, she said, as immigrants' earnings exceeded those of native-born workers who left the labor force.

Job growth from immigration has become another flashpoint in an already contentious presidential election. During last week's debate between U.S. President Joe Biden and former President Donald Trump, the latter claimed that all job growth since Biden took office was due to illegal immigration and "rebound jobs."

“Most studies do not find that immigration harms employment outcomes for native-born Americans because immigrants are both consumers and producers of goods and services, so while they may increase competition for jobs in some areas, they also increase demand for goods and services, which creates jobs,” Pollack noted.

The article is forwarded from: Jinshi Data