The first half of the year showcased a robust labour market despite a slowing economy. What can we expect in the second half?
As the U.S. economy and markets transition into the second half of the year, they are in a significantly different position compared to the beginning of 2024.
This week, shortened by the July 4 holiday, will provide a wealth of data offering crucial insights into the rest of the year. Early signs indicate a slowdown in the housing sector, increased consumer caution, and a labour market moving toward a more balanced state.
Attention will be particularly focused on the job market, starting with the Labour Department’s report on May job openings, due on Tuesday. The expectation is for the number to drop below 8 million, to approximately 7.9 million.
On Wednesday, ADP will publish its June employer survey, with expectations for a job increase of 158,000, slightly exceeding the 152,000 rise seen in May.
After the hot dogs, hamburgers, and fireworks, all eyes will be on Friday’s monthly employment report from the government. Economists are predicting that 190,000 jobs were added last month, a decrease from the unexpectedly high 272,000 increase in May. Nevertheless, job growth has been consistently beating forecasts in recent months.
“Looking ahead, we project that nonfarm payrolls will average about 175,000 per month in the second half of the year as the labour market continues to cool from its previous high levels,” said Sam Bullard, managing director and senior economist at Wells Fargo’s corporate and investment banking division. “Indicators of this trend include job openings falling to their lowest level in over three years, temporary employment declining for 25 of the past 26 months, the unemployment rate increasing to 4.0% from 3.4% last April, and part-time job growth outpacing full-time employment.”
“Along with inflation, the Federal Reserve is carefully watching the labor market. Any unexpected positive surprises in the next few months could derail our forecasted rate cut for September and potentially push any action to December or even into 2025,” Bullard said.