Source: Jin10 Data
Market attention is increasingly turning to the labor market. Will non-farm payrolls break the deadlock this week?
This week is important for labor market data as the Fed seeks concrete evidence of inflation returning to its 2% target before deciding on rate cuts. Weakness in the labor market will suppress demand for commodities and services, helping the Fed fight inflation.
On Tuesday, job vacancies in the US unexpectedly increased in May, following last month's data showing job vacancies falling to the lowest level in three years.
New data released by the US Bureau of Labor Statistics on Tuesday shows there were 8.14 million job vacancies in the US at the end of May, up from 7.92 million in April. April's figures were revised down from the initially reported 8.06 million job vacancies.
As these data are released, the market is increasingly concerned about the US labor market. The steady increase in initial jobless claims and the steady rise in unemployment rates have economists worried about the possibility of cracks forming in what was once seen as a strong labor market. But Tuesday's data did not show this situation is rapidly approaching.
The Job Openings and Labor Turnover Survey (JOLTS) also showed that US businesses hired 5.8 million employees this month, slightly up from April. The recruitment rate remained at 3.6%, the same as in April. In addition, in Tuesday's report, the resignation rate, considered a sign of worker confidence, remained steady at 2.2%.
At the same time, the ratio of job vacancies to unemployed workers remained stable at 1.2, consistent with pre-pandemic levels, which supports the view that the labor market is normalizing rather than currently cooling off completely.
At least in May's data, this concern did not worsen, as the job vacancy rate rose from 4.8% last month to 4.9%.
"Inflation isn't the only risk we face," said San Francisco Fed President Daly earlier. "As we work to achieve our goals, we need to focus on the two aspects of our mission, price stability and full employment."
Currently, the market is closely watching non-farm payrolls which are due to be released on Friday. Economists expect that employers added 195,000 jobs last month, a large drop from the unexpected 272,000 in May, and the unemployment rate will remain at 4%.
Michael Gapen, Chief US Economist for Bank of America, believes that based on current information, non-farm data on Friday is expected to continue showing a market that is "cooling but not yet frozen."
LPL Financial Chief Economist Jeffrey Roach wrote on Tuesday:
"Overall, as early signs of cooling appear in the labor market, high-paying job vacancies are slowing. It seems possible to talk about a soft landing as long as the job market stabilizes, because consumers will have some spending power. However, a strong labor market will make it more difficult for the Fed to achieve its goal of bringing inflation close to 2%."
Editor / jayden