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Jobs Report Projected to Show Cooling Wage Growth

This month’s jobs report is projected to show slowing hiring and cooling wages.

That’s according to a survey of economists published Thursday (July 4) by Bloomberg News, one day before the Bureau of Labor Statistics releases its monthly wages/employment report.

This survey forecasts that payrolls likely increased by 190,000 in June, while average earnings probably rose around 3.9% year over year, the lowest amount in three years. The survey also projected a 4% unemployment rate, the highest in more than two years.

Gradual labor market cooling of this sort would bolster Federal Reserve policymakers hoping to make multiple interest rate reductions later this year, the report noted.

“Headline payrolls may suggest the Fed can be patient about cutting rates, but the recent rise in the unemployment rate flags more urgency,” Bloomberg economists Anna Wong, Stuart Paul, Eliza Winger and Estelle Ou wrote in a preview of the pending numbers.

“We think the Fed will have enough evidence by the September FOMC meeting to begin cutting rates,” the economists added.

Bloomberg’s survey came one day after ADP released its monthly report on jobs, which showed growth in the private sector cooling in June, the third straight month of a slowdown.

Private employers added 150,000 jobs during June, the report said, down from the revised total of 157,000 jobs added in May and the 188,000 jobs added in April.

“Job growth has been solid, but not broad-based,” Nela Richardson, chief economist at ADP, said in a news release. “Had it not been for a rebound in hiring in leisure and hospitality, June would have been a downbeat month.”

PYMNTS Intelligence has been tracking consumer wages since the start of the pandemic, and as 2024 began, found that 85% of consumers said increases in their paychecks had not kept up with higher prices.

Though inflation is cooling, relief in the paycheck-to-paycheck economy may prove short-lived, however, according to recent data from the Federal Reserve Bank of Atlanta.

Writing on its blog last week, the Fed noted that “real wage growth has turned slightly positive,” and calculated that through May, real wages had increased 0.5% year over year. That’s the good news. As for the bad…

“While real wage growth has turned slightly positive in recent months, the level of real wages is still below where they were at the onset of the inflation surge that we began to see in the first quarter of 2021,” said the Fed. “Simply put, real wages haven’t fully caught up to the sudden burst in inflation.”