Friday's Jobs Report Likely to Show May Numbers a Fluke
The June jobs report is likely to confirm that May's dismal employment numbers were a fluke, according to one analyst.
The economy added 38,000 jobs, missing expectations of 158,000 in May. The consensus estimate for Friday's June report stands at 180,000. Simon Smith, chief economist of FxPro, based in London, expects a triple-digit headline payrolls figure on Friday, confirming the May numbers were an aberration.
The ADP Employment report, released Thursday, showed 172,000 private-sector jobs were added in June. The ADP figures tend to align with the official report from the federal government, although that didn't happen in May. The ADP report showed 173,000 private-sector jobs were created in May, far from the Bureau of Labor Statistic's reading of 38,000. The ADP May figure was revised lower on Thursday to 168,000.
Meanwhile, the U.S. Federal Reserve expressed concerns about the labor market, per the minutes of its June meeting, released Wednesday. "Almost all participants judged that the surprisingly weak May employment report increased their uncertainty about the outlook for the labor market," according to the minutes.
With the unemployment rate at 4.7%, a level many economists consider full employment, Fed officials expect job growth to stall. "With labor market conditions at or near those consistent with maximum employment, it would be reasonable to anticipate that gains in payroll employment would soon moderate from the pace seen over the past few years," the minutes added.
Regardless, Smith thinks a near-term Fed rate hike is off the table.
"There was certainly a note of caution" in the latest minutes, Smith said, adding that rate hike expectations have been ratcheted down since the Fed's meeting in mid-June.