US job gains are set to pick up in June, as the world’s largest economy continues to heal from the Covid-19 shock and hiring catches up with the unrelenting demand for workers.
According to a consensus forecast compiled by Bloomberg, employers across the country are expected to have added 720,000 positions in June, exceeding the 559,000 gains posted in May, which fell short of expectations. The unemployment rate is predicted to edge lower as well, to 5.6 per cent from 5.8 per cent the previous month.
The data, which will be released by the Bureau of Labor Statistics at 8.30am US eastern daylight time on Friday, comes at a critical juncture for the American economy.
Easing lockdown measures and generous government stimulus programmes have fuelled a robust rebound in economic growth this year. US consumer prices have in turn surged as supply chain constraints have hampered some businesses’ ability to meet red-hot consumer demand.
Crippling labour shortages have also hamstrung employers, as childcare constraints and fears about catching Covid dissuade people from returning to the workforce. Some businesses blame unemployment benefits for holding up the jobs recovery, prompting several Republican-leaning US states to slash aid.
Companies have begun raising wages and doling out perks to attract new hires. Friday’s report will show if those measures are helping to balance the labour market mismatches.
Economists polled by Bloomberg forecast the labour force participation rate, which tracks the number of Americans either employed or looking for a job, to hold steady around its current level of 61.6 per cent. Average hourly earnings, meanwhile, are set to rise 0.3 per cent from the previous month, for a year-over-year increase of 3.6 per cent.
Despite June’s expected gains, US employment remains far from its pre-pandemic levels. In May 9.3m people were still unemployed, compared to 5.7m in February 2020.
A strong jobs report will help to bolster the case made by a cohort of US central bankers that the Federal Reserve should begin to consider withdrawing its monetary policy support as it closes in on “substantial further progress” towards averaging 2 per cent inflation and achieving full employment. That has long been the threshold for any adjustment to the Fed’s $120bn monthly asset purchase programme.
Fed chair Jay Powell and other members of the Federal Open Market Committee have instead urged patience — a message they sought to hammer home last month following the release of the US central bank’s “dot plot” of individual interest rate projections, which signalled a potentially more hawkish stance than many had anticipated.
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