US jobs report awaited; slowdown expected

investmentnews.com:

Forecasters expect the US employment report for May will add new evidence the labor market is gradually cooling, even as hiring rebounded compared to April.

The figures, to be published Friday by the Bureau of Labor Statistics, are expected to show employers boosted payrolls by 180,000 last month, according to the median estimate in a Bloomberg survey. Average hourly earnings likely advanced 3.9% over the last 12 months, which would match the rate in April when wage growth hit its slowest mark in almost three years.

If forecasts prove accurate, the report would reinforce the view, supported by a wide range of recent data, that the US economy is stepping down a gear from the robust pace of growth seen last year, but not so much that Federal Reserve policymakers will feel rushed to consider interest-rate cuts.

“The May jobs report is unlikely to sway the Federal Reserve from its current wait-and-see posture, but it will provide further evidence that the labor market isn’t as strong as it was a year ago, and that it is converging towards a less inflationary balance,” EY Senior Economist Lydia Boussour wrote in a June 4 note to clients previewing the numbers.

Here’s what to watch for in key components of the report:

Monthly payroll growth has been a robust 246,000 on average this year so far, feeding consumer spending that has helped keep inflation above the Fed’s target. Two consecutive reports showing still-healthy jobs growth, but well below that pace, would point to a more balanced labor-market dynamic.

“We think the labor market is normalizing, not necessarily weakening,” Michael Gapen, head of US economics at Bank of America Corp., wrote in a June 5 note to clients. “Job openings are coming down and employment growth