US labour demand to show resilience as economy cools

Bloomberg

Employers in the US probably added workers at a more moderate yet still healthy pace last month as the jobless rate held near its lowest level in decades, suggesting resilient labour demand even as the economy cools.
The government’s latest payrolls tally is projected to show a 273,000 increase for June, based on the Bloomberg survey median. The unemployment rate is seen staying at 3.6%, while average hourly earnings probably rose 5% from a year ago.
Wage growth running well north of its long-run average and steady hiring suggest Federal Reserve policy makers will forge ahead with another 75 basis point rate hike this month. Investors will gain some insight into their thinking in minutes from the June meeting.
Data shows that job openings remained elevated in May, indicating companies still want to hire despite a softening in economic activity and concerns about the outlook.
The number of vacancies is seen easing to 11 million from 11.4 million in April. That’s still close to the record 11.9 million in March. Labour market tightness is a concern for Fed officials because it risks feeding into a spiral of faster wage growth and inflation.
Among other US economic data in this holiday-shortened trading week: the Institute for Supply Management will issue its services index for June, and the Fed will report on May consumer borrowing. The government’s May trade deficit figures are also due.
Meanwhile, the home-price growth started to slow in the US in April. A national measure of prices climbed 20.4% in April, down from the 20.6% gain in March, the S&P CoreLogic Case-Shiller index showed Tuesday. Craig Lazzara, a managing director at S&P Dow Jones Indices, noted that April data was showing initial, but inconsistent, signs of a deceleration in price gains. Mortgage rates have nearly doubled since the end of 2021. The run-up in rates, combined with high prices, are squeezing potential buyers and starting to slow housing markets in some of the most popular pandemic boomtowns.
Still, Lazzara noted that growth rates are strong by historical standards. A measure of prices in 20 US cities accelerated, climbing 21.2% in April following a 21.1% gain in March, according to the index. Tampa, Florida; Miami and Phoenix had the biggest gains.
“Mortgage financing has become more expensive as the Federal Reserve ratchets up interest rates, a process that had only just begun when April data were gathered,” Lazzara said in a statement.
“A more challenging macroeconomic environment may not support extraordinary home price growth for much longer.”
The housing market slowdown is having ripple effects across the industry. Mortgage lenders are forecasting a slump in business and brokerages including Compass Inc. and Redfin Corp. are laying off workers.
The index, which accounts for more than 27 years of data, is an important gauge of the health of the US housing market in part due to its breadth of measurements around the country.