US jobs growth is expected to have slowed in May, in one of the last key data releases before central bank officials decide whether to hold interest rates steady or push ahead with another increase at their next meeting.
Economists surveyed by Bloomberg estimate the US economy added 195,000 new non-farm jobs last month, down from 253,000 in April.
The unemployment rate is forecast to tick up from 3.4 per cent to 3.5 per cent, while month-on-month wage growth is expected to cool from 0.5 per cent to 0.3 per cent. However, wage growth is expected to remain high at 4.4 per cent on an annual basis, highlighting the tightness in the labour market.
The Bureau of Labor Statistics will release the data at 8:30am Eastern Time on Friday.
Employment and wage growth are key drivers of inflation, particularly in the services sector, and economists and officials have been watching for signs of a slowdown in these measures as an indicator that price pressures are also on course to slow.
Economists traditionally look for wage growth to fall to about 3.5 per cent for the Fed to hit its 2 per cent inflation target.
If the consensus forecasts are accurate, the data would fuel expectations that the central bank could pause its cycle of interest rate increases at its next meeting in mid-June after 10 consecutive rate rises.
Investors had boosted bets the Fed would announce another increase after recent data pointed to stubbornly high core inflation figures and elevated levels of job openings, but several central bank officials have suggested this week they could pause tightening for a month to give themselves more time to assess the effect of their actions so far.
Philip Jefferson, president Joe Biden’s pick to become the next Fed vice-chair, on Wednesday said “skipping a rate hike at a coming meeting would allow the committee to see more data before making decisions about the extent of additional policy firming”, but added a pause would not stop the central bank from resuming increases in July.
Philadelphia Fed president Patrick Harker also suggested skipping a rate rise for one meeting, though Cleveland Fed president Loretta Mester told the Financial Times that there was “no compelling reason to pause”.
Futures markets on Thursday afternoon were pricing in a 25 per cent chance that rates increase this month, compared with a peak of 70 per cent earlier in the week. However, investors still see a decent likelihood of another rate rise by the Fed’s following meeting in July.
