A unique confluence of events should converge to support a net increase of 180,000 jobs in June when the monthly employment data is released on Thursday.
In addition, we are forecasting a 4.3% unemployment rate with risk of a decline to 4.2% on the back of what we expect will be a strong month of hiring in health care, education, government, and leisure and hospitality, which will benefit from temporary hiring linked to the World Cup.
Gains in the goods-producing and construction sectors will also be a factor, as a historic cap-ex super cycle bolsters demand for those workers.
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Average hourly wages are expected to increase at a 0.2% monthly rate in June and by 3.4% from one year ago.
Should demand for goods-producing and construction workers increase beyond their respective three-month averages of 25,000 and 14,000 new positions, we could see a slightly stronger pickup in wage gains during the June reporting period.
But a 3.4% annual wage increase will still result in another month of declines in inflation-adjusted wages from one year ago.
While that will not allay concerns about the underlying pace of service sector inflation or the increasing competition for scarce capital and resources by both public and private sources, it should be sufficient to keep the Federal Reserve on hold at its meeting on July 29.
