Analysts are unanimous in their expectations of a bullish U.S. jobs report for May, with the number of new additions pegged at 185,000.
Lucia Mutikani from Reuters had the news:
U.S. job growth likely increased solidly in May, with wage gains expected to pick up, showing strength in the labor market before an escalation in trade tensions that analysts have cautioned could pressure an already slowing economy.
With the trade war drums beating loudly in the background, a strong employment report from the Labor Department on Friday will probably do little to dial back market expectations that the Federal Reserve will cut interest rates this year. Fed Chairman Jerome Powell said on Tuesday the central bank was closely monitoring the implications of the trade tensions on the economy and would “act as appropriate to sustain the expansion.”
AP’s Christopher Rugaber noted a positive jobs report would quench growing concern about a slowdown in the U.S. economy.
The economy is showing signs of sluggishness after having expanded at a healthy 3.1% annual rate in the April-June quarter. Consumers have been cautious about spending, and companies are scaling back their investment in high-cost machinery and equipment.
The Federal Reserve Bank of Atlanta estimates that annual growth will slump to just 1.5% in the April-June quarter. That potential weakening, driven in part by President Donald Trump’s trade conflicts, has also raised pressure on Federal Reserve policymakers to consider cutting short-term interest rates in the coming months. For most of this year, the Fed has indicated that it would take a patient approach toward rate changes.
Manufacturers have barely added jobs in the past three months after healthy gains last year, a sign that trade conflicts and a slowdown in auto sales might be slowing hiring. Retailers, hammered by online competition, have cut jobs for the past three months. Home building and commercial construction have weakened, a trend that could force builders to shed workers.
However, even a drop in new jobs might not mean a slowdown but simply a shortage of workforce, says MarketWatch’s Jeffry Bartash.
If there is a big dropoff in hiring, slower economic growth and rising trade policy tensions might not be the reason. Companies increasingly say they cannot find enough workers regardless of skill level.
“Tight labor was widely blamed for subduing stronger employment gains,” the Minnesota Federal Reserve said. “Contacts indicated that the labor market was tight and that they had difficulty filling positions at all skill levels,” the Chicago Fed said.