There are indications that the labor market in the United States is slowing down, and even deteriorating, so the June non-farm employment report is of greater significance. The June non-farm employment report will be released at 8:30 p.m. Beijing time on Friday, with economists expecting an increase of 0.2 million in employment, lower than the 0.272 million in May. So far, a total of 1.24 million new jobs have been added in 2024, a decrease of about 0.05 million per month compared to the same period last year.

From a historical perspective, job growth is still robust. However, there are signs that the job market may be weakening, which may indicate a broader economic slowdown in the future.

Nick Bunker, director of economic research at Indeed Hiring Lab, said: "At the time this report was released, uncertainty about the economic outlook has increased more than in the past few months. Specifically, I am more concerned about the unemployment rate, which has been slowly rising."

The US unemployment rate rose slightly to 4% in May, the first time it has reached this threshold since January 2022, and higher than 3.7% a year ago. It is expected that the unemployment rate will remain at this level.

Under normal circumstances, a 4% unemployment rate should be celebrated, not worried about. However, some economists are concerned about how the current unemployment rate compares to last year.

The unemployment rate in May was 0.5 percentage points higher than the 12-month low of 3.5% set in July 2023, which could trigger a recession indicator called the "Sahm Rule". This indicator suggests that when the three-month average unemployment rate is half a percentage point higher than the 12-month low, the economy will enter a recession.

Although there is almost no data indicating that a recession is imminent, the trend of the unemployment rate is causing concern.

Bunker said: "If the unemployment rate continues to rise slowly as it has in the past, I don't think this means we're very likely to trigger the Sahm rule, or any recession indicator based on the unemployment rate. That being said, the possibility of this happening has increased, even if it is not the most likely outcome at the moment."

The US economy slowed down in the first half of 2024. The annualized growth rate of gross domestic product (GDP) in the first quarter of the United States was 1.4%, and the Atlanta Fed predicted that the growth rate in the second quarter would be only 1.5%.

In addition, inflation concerns have not dissipated and may keep the Federal Reserve keeping interest rates unchanged for a longer period of time.

In addition to the main employment and unemployment data, market participants and economists will also focus on several other key indicators.

Worrisome is the difference between the non-farm employment numbers provided by institutions participating in the US Bureau of Labor Statistics survey and the number of working households reported in the report.

Although the institution survey shows that the number of employed people has increased by about 2.8 million in the past 12 months, the number of households used to calculate the unemployment rate has only increased by 0.376 million. Economists generally believe that the institution survey is more reliable and less volatile because it covers a larger sample size, but this difference has attracted some attention.

In addition, working hours and average wages, as measures of inflation, will receive some attention.

Economists expect US hourly wages to increase by 0.3% month-on-month and 3.9% year-on-year in June. If the outlook remains the same, this will mark the first annual growth rate below 4% since June 2021.

Edited by Jeffrey