What to expect from Friday’s big jobs report | Wilnesh News

Investors will be watching May’s non-farm payrolls report for a clearer picture of whether the Federal Reserve can ease its efforts to combat inflation.

Economists surveyed by Dow Jones expect the U.S. Bureau of Labor Statistics to report that the U.S. economy added 190,000 jobs this month, a slight increase from April’s 175,000 jobs.

In addition, the market will pay close attention to wage data, with average hourly earnings expected to grow 0.3%, slightly higher than this month, and 12-month growth of 3.9%, unchanged from last month, and indicating that the central bank still has more work to do.

Other employment indicators this week showed private payroll growth slowing, with ADP reporting an increase of just 152,000 and initial jobless claims rising slightly.

“The May jobs report is particularly important now,” Citigroup economist Andrew Hollenhorst said in a note. “Weaker data (fewer than 175,000 jobs and an unemployment rate of 4% or above) ) would be the final evidence that the economic slowdown is here to stay. On the other hand, unexpected strength will reinforce the view that there is no urgency in the economy.

Citi expects the report to show just 140,000 jobs, with the unemployment rate hitting 4% for the first time since January 2022.

If so, it could push the Fed to cut interest rates earlier than expected.

Markets currently expect the first rate cut to take place in September, with another cut in December. Citigroup’s view on its employment outlook is lower than consensus and is the most inconsistent view on rate cuts on Wall Street so far, with the Fed expected to deliver four rate cuts starting in July and continuing by the end of the year.

However, Goldman Sachs also expects employment to increase by 160,000, lower than consensus expectations, as it believes seasonal adjustments have dampened job growth. However, the company also expects an extra pay week this month to offset some seasonal distortions.

On the issue of wages, Goldman Sachs basically reached a consensus to keep the increase at a level that Fed officials said was inconsistent with the 2% inflation target.

The BLS will report at 8:30 a.m. ET.