Shortly after Federal Reserve Chair Kevin Warsh took the podium after his first Fed meeting and said jobs data had “been moving in a good direction,” the Bureau of Labor Statistics (BLS) released a report that showed the U.S. added just 57,000 new jobs in June, well below the 115,000 economists expected.
Additionally, job growth for April and May was revised lower. Does this mean we should worry about the July jobs report, due out Friday morning? Maybe not.
“The June number was partly payback for strong growth in the previous three months, but it mostly suffered from a large decrease in employment at hotels and in food service,” writes David Payne, staff economist at The Kiplinger Letter, in the Kiplinger jobs outlook. “This drop was also a partial pullback from an increase in May, and is probably related to changes in staff planning for World Cup attendees.”
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ADP jobs report comes in lower than expected
Wall Street got a glimpse of how things are going in the labor market on Wednesday morning with ADP’s National Employment Report, which showed private payrolls rose by 44,000 in July — well below the 95,000 jobs added in June and the 75,000 economists expected.
“Job-changers are highly sensitive to real-time economic conditions, and their rapid pay growth implies supply constraints in parts of the labor market,” says Dr. Nela Richardson, chief economist at ADP. “Typical hiring patterns, meanwhile, are changing as employers react to shifting macro-economic conditions.”
When is the next jobs report?
The BLS will release the next jobs report at 8:30 am Eastern Standard Time on Friday, August 7. As a group, economists expect the U.S. to have added 85,000 new jobs in July and the unemployment rate to remain at 4.2%.
Ahead of the July jobs report, we looked at what economists, strategists and other experts on Wall Street expect the data to show and what the results could mean for the Fed and investors going forward. You’ll find these outlooks, edited at times for brevity, below.
What to expect from the July jobs report
(Image credit: Getty Images)
“Labor market conditions appear to have been little changed in July. Nonfarm payroll growth averaged 92K over the first half of the year, and we look for a similar 95K increase in July. Small business hiring plans improved in June and initial jobless claims moved lower between survey weeks, suggesting layoffs remain limited. But, not all the July labor data are pointing in a positive direction. Indeed job postings are hovering below year-ago levels, while ADP’s measure of weekly private-sector payroll growth has slowed since the spring.” – Wells Fargo economists
“The U.S. labor market continues to appear healthy, with weekly jobless claims at a low-risk level. If job creation ends up being in-line with consensus expectations in Friday’s report, it would be yet another arrow in the strong labor market quiver. One watchpoint would be whether the June jobs data gets revised up and if so to what extent. Multiple private sector alternative data sources pointed to stronger job creation than the official numbers, which creates the potential for upside revisions to June payrolls.” – BeiChen Lin, Senior Investment Strategist at Russell Investments
“Labor turnover is lower than normal as firms slow the pace of hiring. One exception is the recovery of job openings in retail firms as they retool payroll after being overly cautious during last year’s shifting trade policy. For this Friday, expect July payrolls to grow by 75,000 along with an uptick in unemployment rate of 4.3%.” – Jeffrey Roach, Chief Economist for LPL Financial
“Fifth Third Commercial Bank forecasts for Friday’s release of the Bureau of Labor Statistics’ jobs report to show a decent 90,000 jobs added on the month in July. The unemployment rate is forecast to hold steady at 4.2% as the labor force participation rate edges up to 61.6% from June’s post-pandemic low of 61.5%. Growth of average hourly earnings is forecast to hold steady at 3.5% on the year, with the average workweek also stable at 34.3 hours. If job growth continues at its recent pace, the unemployment rate will likely edge lower in coming months and close 2026 around 4%.” – Bill Adams, Chief U.S. Economist at Fifth Third Commercial Bank
“Friday’s unemployment report may be the first true test of whether the economy can withstand Kevin Warsh’s tougher stance on inflation. After June’s surprisingly weak payroll gain, investors are looking for a ‘just right’ Goldilocks report. A hotter-than-expected jobs report would likely push Treasury yields higher and pressure the market’s recent leadership in AI, software, and other high-growth stocks that have thrived despite elevated rates. A cooler report, on the other hand, could reinforce the soft-landing narrative that has fueled the rally. When earnings season winds down, the labor market is poised to become the next major catalyst for stocks and expectations surrounding the Fed.” – Jay Woods, Chief Market Strategist at Freedom Capital Markets
