The strength of May’s employment figures surprised many experts, with non-farm payrolls adding 390,000 workers.
The June report is due July 8 and economists expect a deceleration to a gain of around 270,000, according to a Bloomberg survey.
This would represent one of the smallest increases in the economic recovery which began in May 2020. But it is well above the trend of the 10 years preceding the covid pandemic, which began in March 2020.
A figure close to the consensus would be “more of a natural slowdown than a loosening of the economy,” Brett Ryan, senior U.S. economist at Deutsche Bank, told Bloomberg.
signs of strength
By most measures, the labor market remains solid. Job postings totaled 11.3 million as of May 31, while hiring recorded 6.5 million during the month.
“That’s not what a recession looks like,” Nick Bunker, an economist at the Indeed jobs reporting service, told The Washington Post. “The demand for workers may be stagnating, but it remains at very high levels. The labor market is not signaling a recession.
Additionally, average hourly earnings climbed 5.2% in the 12 months to May. Admittedly, they only rose 0.3% from April, which translates to an annualized rate of 4.3%.
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Additionally, a survey released in June by Insight Global showed that 78% of American workers are worried about their job security in the next recession. And economists see a high probability of a recession ahead, as the Federal Reserve raises interest rates to stifle inflation.
Chances of recession
A survey conducted by the Financial Times found that 70% of economists believe a recession will begin in 2023.
Harvard economist Larry Summers noted that over the past 65 years, whenever inflation has exceeded 4% and unemployment has been below 5%, a recession has followed within two years. .
Consumer prices climbed 8.6% in the 12 months to May, and unemployment recorded 3.6% that month.
Returning to the survey of workers, he found that inflation is also a major concern for them, with 42% also being concerned about the impact of a recession and inflation.
Price increases have outpaced wage increases, so workers have less purchasing power than a year ago. And a recession would obviously put downward pressure on hiring and wages.
Meanwhile, some big companies, including Netflix (NFLX) – Get the Netflix Inc. and Tesla (TSLA) – Get the report from Tesla Inc., announced job cuts. So, although the labor market is now solid, problems could lie in wait.
