Source: Jin10 Data

The US Bureau of Labor Statistics will release non-farm payroll data for June tonight at 8:30pm. Economists do not expect a cliff-like drop in job growth.

Although the total number of monthly job additions is expected to gradually cool down, it is still expected to remain strong: economists expect the US to add 190,000 non-farm payroll jobs last month, a decline from the stronger-than-expected 272,000 job additions in May. In addition, according to a consensus estimate from FactSet, the unemployment rate will remain stable at 4%.

Economists also expect that the month-on-month increase in average hourly earnings will decrease from 0.4% in May to around 0.3%, and the year-on-year increase will decrease from 4.1% to 3.9%. This is a potential inflation pressure indicator closely watched by Federal Reserve officials. Federal Reserve Chairman Powell said on Tuesday that the unemployment rate is recovering to a "more sustainable level," and wage growth is also true.

"The wage increase is still slightly higher than the level in equilibrium. However, you can see that the labor market is cooling appropriately," he said.

"We are closely monitoring the job market, but it does not appear to be overheating or causing major problems with inflation."

Although various factors such as high inflation stimulating the Federal Reserve to raise interest rates sharply, the aftermath of the pandemic and geopolitical uncertainties seem to be certain to trigger an economic recession, the US labor market is still stable. The number of new jobs added every month has often been stronger than expected, and the unemployment rate has remained at or below 4% for 30 consecutive months.

That is to say, the current US job market is very different from 30 months ago. "The labor market has normalized," said Luke Tilley, Chief Economist at Wilmington Trust Fund. But he warned, "It is worrisome whether the situation will deteriorate from now on."

But more and more data shows that the economy is slowing down, consumer spending is slowing down, and workers' sense of security is also decreasing. Therefore, Friday's non-farm payroll report may provide a key signal to help determine whether the job market is stable or even restored to its pre-pandemic state, or weaker than the data shows.

Nela Richardson, chief economist at ADP, said on Wednesday: "I think as long as job growth continues to show a gradually cooling trend, the economy is in good shape." However, she said, "If we see the cooling speed of the job market become steep from a progressive way, I think this is a warning."

Will the two surveys tell different stories?

In the May employment report before, the two surveys seemed to tell different stories: the business survey showed that employers were adding job opportunities at a still strong pace, while the household survey showed a decrease of 0.408 million employed people.

Although the institutional survey is considered the "gold standard" by economists, the household survey provides more detailed information about demographic data, and also reflects in the unemployment rate. However, due to the smaller sample size and lower response rate, it is considered to have greater volatility.

Dean Baker, economist and co-founder of the Center for Economic and Policy Research, wrote in a report released earlier this week: "The business and household surveys continue to show completely opposite labor. A huge difference is still disturbing," he added. "Although we see evidence of a weak labor market, most other data seems more consistent with the institutional survey."

It is worth noting that job vacancies have decreased, recruitment has decreased, people are no longer willing to easily change jobs, but stay in their current positions; perhaps most importantly, layoffs have been steadily increasing in recent weeks.

How do immigrants contribute to the US labor market?

Julia Pollak, chief economist at ZipRecruiter, pointed out that since August 2022, the average monthly increase in non-farm population has been 0.25 million, which is much faster than the average of 0.164 million in 2019.

"In other words, in the case of stagnant native-born population, we achieved higher job growth while maintaining roughly the same unemployment rate." "A key reason is the impact of immigrants on labor supply."

Senior economists at Lightcast, a labor market research company, said that by 2024, immigrants will account for 43% of US labor force growth. She said that in May, this ratio soared to 280%, because immigrant income exceeded the income of native-born workers who left the labor market.

Immigrant job growth has become another hot spot in the already controversial presidential election. In last week's presidential debate between US President Biden and former President Trump, the latter claimed that all job growth since Biden took office was brought by illegal immigrants and "rebound employment."

"Most studies have not found that immigration harms the employment outcomes of native-born Americans, as immigrants are both consumers and producers of goods and services, so although they may increase employment competition in certain areas, they also Increase demand for goods and services, creating job opportunities," Pollak pointed out.

Editor / jayden