What to Expect From the May Jobs Report

  • The Labor Department will release its estimate of hiring and unemployment for May at 8:30 a.m. Eastern time. The monthly report provides a snapshot of the American economy.

  • Analysts on Wall Street are predicting a gain of about 175,000 jobs, according to Bloomberg, compared with an increase of 263,000 in April.

  • The unemployment rate is expected to remain unchanged at 3.6 percent. That was a 50-year low and shows just how far the current expansion has come.

  • Average hourly earnings are expected to rise 0.3 percent, compared with a 0.2 percent increase in April. That would bring the 12-month increase to 3.2 percent.

Wall Street is looking for solid employment gains for May, but a big surprise may be in store. The Census Bureau is staffing up ahead of its 2020 survey, and if many of those temporary hires were brought on board in May, they could add hundreds of thousands of jobs to the headline number.

Even with that potential swing, other factors could influence the number. In April, payrolls grew much more than expected, so some moderation may be in store. Wrap in softness in manufacturing and trade worries, and you have the ingredients for an especially hard-to-predict report.

[Here’s a primer on where the numbers come from and what they mean.]

President Trump’s escalating trade war with China and the possibility of new tariffs on Mexican imports have unsettled the financial markets. Analysts will be closely watching the May data for any sign that these moves are hurting the economy or are making employers more cautious about adding workers.

“It may not lead to firing, but it may cause businesses to postpone hiring because of the uncertainty,” said Michelle Meyer, chief United States economist at Bank of America Merrill Lynch.

Ms. Meyer said she would be evaluating job creation in the goods sector, which includes manufacturing, relative to hiring in the service sector. “If global weakness or the trade war filters in, it’s going to have a bigger impact on the goods side of the economy,” she said.

Not all tariffs are created equal, said Neil Bradley, chief policy officer at the U.S. Chamber of Commerce. The threat of new duties on Mexican imports poses different risks than the tariffs imposed on China.The China tariffs have been building for months, but many business leaders believe Mr. Trump could reach a deal with President Xi Jinping.“The shift to Mexico was totally unexpected and it caught people by surprise,” Mr. Bradley said. That effect, he said, was heightened because it came in a statement from the White House, “rather than as an aside to the press or a social media post.”

Every 10 years, the Census Bureau hires an army of temporary workers. Diane Swonk, chief economist at the accounting firm Grant Thornton, thinks the first big wave of that mobilization happened last month.

“This is all a tall order in an economy in which workers are becoming scarce,” she said.

The process wreaks havoc with the monthly jobs figures because of the magnitude of the hiring. In May 2010, new census workers added 411,000 to the employment data.

As of March, the bureau had hired only about 800 workers. “They really have to get these people on board,” Ms. Swonk said, noting that the mapping and checking of addresses has to begin soon.

The Federal Reserve will be paying close attention to the jobs figures. On Tuesday, Jerome H. Powell, the Fed chairman, hinted that the central bank was prepared to cut rates if the trade war hurt the economy. A weak employment report would be one data point suggesting that the economy was indeed softening.

Until relatively recently, the Fed was considered likely to continue the interest rate increases that began in December 2015. The Fed changed course in January, with Mr. Powell suggesting that very modest inflation and weakness in Europe and China warranted a neutral stance.

The stock markets took Mr. Powell’s remarks on Tuesday as a sign that the next Fed move might be a rate cut, prompting a rally.

If the jobs report is very weak, Carl Tannenbaum, chief economist at Northern Trust, said, “the Fed will need to think very seriously about a pre-emptive rate cut.”

After government reports showed substantial employment gains in March and April and a growth rate of more than 3 percent in the first quarter, it appeared that fears of a recession had been overdone. Now those concerns are back.

Bond yields recently dropped to their lowest level since 2017. This isn’t how it’s supposed to happen when the economy is strong. During good times, the interest rate on government bonds usually rises, as investors plow their money into more risky assets. Plunging bond yields signal worries that growth is about to falter.

Crude oil prices, which typically rise when traders expect the economy to charge ahead, are down about 20 percent since late April.

The current economic recovery has defied recession predictions several times, matching the record longevity of the 1990s expansion.

Nevertheless, Mr. Tannenbaum puts the risk of a recession higher than at any time since the 2008 financial crisis. “They say that policy errors, not old age, end expansions, and the steps taken on the trade front in the last five weeks fall under that,” he said.

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