US labor market growth likely slowed in June, unemployment to remain at 2-year low
US non-farm payrolls likely increased by 268,000 in June, following 390,000 rise in May that would be slightly above the half of this year’s monthly average of 488,000, while June forecast points to the smallest gain since April 2021.
Despite the US employers likely hired the fewest workers in 14 months, the jobless rate is expected to remain at 3.6%, near pre-pandemic lows, signaling that labor market remains tight that supports Fed’s intention for aggressive 75 basis points rate hike in July.
US job openings remain strong, with 11.3 million new openings in May that marks an offer of 1.9 jobs per every unemployed person and eases concerns about recession, as situation in a labor market is very stable at the moment, with most of industries having recovered job losses during the pandemic and cannot contribute to such scenario.
Most of analysts keep the positive view, though remain cautious over possible downside surprise in June, mainly due to seasonal factors, but overall outlook shows prevailing outlook despite difficult situation.
Tight labor market adds support to Fed’s hawkish stance, with expectations that inflation is likely to rise further in June (report is due next week) and underpin Fed’s move to more restrictive policy.