The May nonfarm payrolls report, set to be released by the Bureau of Labor Statistics, is anticipated to reveal a sharp decline in job growth compared to previous months, with economists from Dow Jones forecasting only 80,000 jobs added in May, down from an average of 150,000 in the prior two months.
This slowdown is attributed to a combination of low hiring rates and a trend of job retention among current employees, as noted by Laura Ullrich from Indeed Hiring Lab. Additionally, there are signs of increased layoffs, with 97,006 planned job reductions in May, marking a 16% rise from April and the highest for the month since 2020.
Goldman Sachs and Vanguard have even lower expectations, predicting payroll gains of 60,000 and 20,000, respectively. The unemployment rate is expected to remain steady at around 4.3%, although some forecasts suggest it could edge up to 4.4%.
The implications of this report are significant for the Federal Reserve, as a stable labor market amidst persistent inflation could lead to a more hawkish stance in future policy meetings, particularly if inflation remains elevated. Markets currently expect no changes in interest rates during the Fed's upcoming meeting, but the outlook could shift depending on the job numbers