ALBAWABA – Upcoming United States (US) labor market data, on Friday, is projected to show signs of a cooling US jobs market in May, indicating a decline in the rate of inflation, Bloomberg reported.
Government data is expected to show payrolls in the US have increased by less than 200,000 in May, compared to the monthly average of 370,000 over the past year.
However, earnings seem to have increased by 0.3 percent in May, compared to April.
According to the Phillips Curve, an economic model for understanding the relationship between the labor market and inflation, the higher the employment rates, the higher inflation is, and vice versa.
Another report in the coming week is forecast to show the fewest jobs opening up, although vacancies are still about 2 million above pre-pandemic levels, as per Bloomberg.
The report is expected to show evidence of a decline in job openings in April, for the fourth month in a row, according to the New York-based news outlet.
These reports will give the Federal Reserve Board (the Fed) some clues as to the impact of tighter credit conditions, higher interest rates and the current ongoing concerns.
A lot hangs in the balance with the US debt ceiling crisis still unsolved and higher interest rates weighing on the economy.
Since March 2022, the Fed has raised interest rates by nearly 5 percent.
Meanwhile, the US is dealing with a severe cash and debt crisis, with the deadline for paying the government’s bills coming up on June 1.
Talks have resulted in a preliminary deal, but the proposed bill must clear Congress before US President Joe Biden can sign it and put this crisis to bed. Even though there will be a delay in the payment of bills, until June 4, at the least.
The Fed will next meet on June 13-14 to decide whether another interest rate hike is warranted.
Bloomberg economists argue that the slowdown, indicated by the decline in hiring, may not be enough to convince the Fed not to raise or enact another interest rate hike.
“May jobs data are expected to show a slowdown in the pace of hiring — but not enough to put the Fed at ease. The choppiness of the monthly payroll data masks a gradual slowdown in the hiring pace since late-2021 — though the labor-market cooling has been slower than most analysis expected.”
