With the low unemployment rate and labor growth expected to be the continuing narrative, Friday’s June jobs report released by the Bureau of Labor Statistics at 8:30 a.m. Eastern Time will take a closer look under the hood of the employment market and will reveal notable trends to watch in the forthcoming months.
In addition to obtaining revealing information regarding the employment outlook, the June jobs report could also hint at more rate spikes to come, especially if the data tomorrow holds true that nonfarm payrolls increased by 195,000 and the unemployment rate maintains its 18-year low of 3.8 percent.
One additional item to keep a close watch is wages–economists are prognosticating whether increased wages will force inflationary pressures as the expectation is that average hourly earnings will increase by 0.3 percent compared to May and 2.8 percent within the past year. A closer look at other secondary data could allow economists to extrapolate trends in the labor market, such as the number of workers who have been unemployed for more than six months.
Data revealed in Friday’s jobs report:
- Nonfarm payrolls, June
- Unemployment rate, June
- Average hourly earnings, month-on-month, June
- Average hourly earnings, year-on-year, June
- Trade balance, May
Tightening Labor Market
The tightening of the labor market will be looked at, especially if, as the Federal Reserve portends in light of the data, “indicators such as a very high rate of job openings and an elevated quits rate as additional signs that labor market conditions were strong.” A growing economy could be stifled if a tightening labor market begins to surface in the jobs report data.
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Minutes from the Federal Reserve’s June policy meeting stated that “Several participants, however, suggested that there may be less tightness in the labor market than implied by the unemployment rate alone, because there was further scope for a strong labor market to continue to draw individuals into the workforce.” Despite this, the Federal Reserve is reticent to confirm that a tightening of the labor market is indeed the case given the current economic climate.
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