We forecast an increase of 100,000 in nonfarm payrolls when the report for June is released on Thursday, down from 139,000 in May, and an increase in the unemployment rate to 4.3% as hiring demand slows.
In a reflection of this reduced demand for workers, continuing claims for unemployment benefits stood at a cyclical high of 1.97 million for the week ending June 21.
We expect a 0.3% increase in average hourly earnings, which should translate to a 3.9% increase from a year ago.
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Given the recent downward revisions to initial estimates of job gains in recent months, we will be watching to see if the May report is downgraded to near or below the 100,000-job level necessary to keep employment conditions stable.
Any move in either the May or June data below 100,000 will put downward pressure on yields and elicit further calls for a rate cut by the Federal Reserve.
Pervasive uncertainty around trade and immigration policy figures to have dampened demand for labor in June.
We anticipate tariff-related hiring in construction, manufacturing, trade and transport to remain soft in contrast with the sustained strength in health care that will underscore a slower pace of service sector hiring on the month.
In addition, the increase of 48,000 jobs in leisure and hospitality that bolstered the May estimate will fall back toward the more subdued three month average of 13,300 because of the slowing in global tourism into the United States.
