US hiring is expected to slow in June

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US jobs growth is expected to slow in June – but not fast enough to discourage the Federal Reserve from resuming interest rate hikes later this month.

Economists polled by Bloomberg predicted the US economy added 225,000 new non-farm jobs last month, down from the previous month’s bumper figure of 339,000 but still above its pre-pandemic average.

The unemployment rate is also forecast to remain near a multi-decade low, falling to 3.6 percent after a modest increase in May.

Official data will be released by the Bureau of Labor Statistics on Friday at 8:30 a.m. Eastern Time.

Employment and wage growth are important drivers of inflation, especially in the services sector. Friday’s data will be scrutinized by investors, economists and central bank officials, who are watching for evidence that the Fed’s rate hikes are starting to have an impact on the economy.

Although headline inflation numbers have started trending downward, the labor market has proven resilient, with economists underestimating the strength of payroll growth for 14 consecutive months.

Hourly wage growth is expected to decline to 4.2 percent on an annual basis. That would be its lowest level in two years, but still well above the rate of about 3.5 percent that most economists consider consistent with meeting the Fed’s 2 percent inflation target.

The central bank kept interest rates steady at its last policy meeting in June to give officials more time to take stock of the impact of previous rate hikes and the possible effects of recent turmoil in the banking sector.

However, policymakers have made clear they are not yet done with their monetary tightening campaign, with most officials predicting two more quarter-point rate hikes by the end of the year.

Futures markets are pricing in a nearly 90 percent chance of a rate hike at the Fed’s next meeting in late July, and Citi economists predict that a figure below the consensus of around 170,000 is also “too bad for the Fed.” Still easily strong enough.” Raise rates in July”

Separate private-sector jobs data published on Thursday bolstered those expectations, pushing the yield on two-year Treasury notes to their highest level since 2007.

Still, Drew Matus, chief market strategist at MetLife Investment Management, said that “if (officials) were so sure they needed to move again, they would have done so at the last meeting.” There is some doubt in his mind.

Matus said: “Any increase in the unemployment rate after last month’s numbers could make some people think about how aggressive they want to be when they are starting to see the effect of the previous increase.”

Additional reporting by Colby Smith in Washington