• The June nonfarm payrolls data is of particular importance, as there are signs that the labor markets may be slowing or even worsening.
  • The report will be released on Friday, at 8:30 am ET. ET is expected to show a growth of 200,000 compared with the 272,000 reported in May.
  • The trend of unemployment has attracted some attention, even though there are few data points that indicate a recession.

Job seekers attend the JobNewsUSA.com South Florida Job Fair at the Amerant bank Arena in Sunrise, Florida on June 26, 2024.
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The June nonfarm payrolls data is of particular importance, as there are signs that the labor markets may be slowing or even worsening.

The payroll gains in 2024 are 1,24 million. This is down about 50,000 per month from the same period last year. Dow Jones surveyed economists who expect the report to be released at 8:30 am on Friday. ET will show a growth of 200,000 compared to 272,000 for May.

The pace of job growth is still good in historical terms. There are some signs that indicate conditions may be softening and could point to a broader economic downturn in the future.

Nick Bunker is the head of the Indeed Hiring Lab’s economic research. He said, “This report comes at a time when there’s more uncertainty than in the past few months about the economy.” “Specifically, I am thinking about the employment rate, which is slowly increasing.”

In May, the unemployment rate climbed to 4%. This is the first time since January 2022 that it has reached this threshold. It was 3.7% one year ago. Forecasts are for the rate to remain at that level.

Normal circumstances would not cause concern if the unemployment rate was 4%. Some economists are concerned about the current rate of unemployment compared to where it was last year.

The rate in May was 0.5 points above the 3.5% 12-month low reached in July 2023. This could trigger a indicator of recession called the Sahm Rule. The rule consistently shows that when the unemployment rate in a three-month period exceeds the 12-month low level by a half percentage point, an economy is in a recession.

The trend of unemployment has attracted some attention, even though there are few data points that indicate a recession.

Bunker stated that “if the unemployment rate continues to rise at the same rate it has been for the past few months, it does not mean we are in a high-risk situation of triggering the Sahm Rule. Or any other measure based on unemployment rate of entering recession.” “That being the case, the likelihood of this happening has increased, even if that’s not what we think is most likely right now.”

The economy slowed down in the first half 2024. The first-quarter GDP growth was 1.4% on an annualized basis. However, the Atlanta Federal Reserve only expects a 2.5% growth rate.

The Fed may also be hesitant to lower interest rates due to lingering concerns about inflation.

Market participants and economists are also watching other important metrics.

Another area of concern is the difference between the number of nonfarm employees reported by households and the total of the payrolls of establishments that participated in the Bureau of Labor Statistics survey.

The establishment survey shows that payrolls have increased by 2.8 million in the last 12 months. However, the household count is only up by 376,000. The establishment survey is generally considered more reliable as it includes a larger sample. However, the disparity between the two has attracted some attention.

As a gauge of inflation, we will also pay attention to the hours worked and the average hourly wage.

Forecasts indicate a 0.3% increase in monthly pay and a 3.9% rise over a year. If the forecast holds true, this will be the first time since June 2021 that the annual growth is below 4%.