These 3 pieces of data may tell us where the economy is headed
The release of important jobs data occurs on Thursday this week with the publication of nonfarm payrolls, U.S. average weekly earnings, and unemployment figures. All three of these economic indicators are recognized as barometers of the health of the U.S. labor market and overall economy.
Nonfarm payroll figures have rebounded recently since the dramatic collapse in the March 2015 reading. The months of April and May recorded month-over-month growth rates of 85.71% and 26.70% respectively. The Estimize community are predicting a month-over-month decline in June of -18.19%. Nonfarm payrolls represent circa 80% of the workforce in the United States and therefore provides a good representation of the U.S. private sector labor market.
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The U.S. average weekly earnings figures are also released on Thursday. Despite the strengthening domestic economy and a falling unemployment rate, wage growth is still not where it should be at this point in the economic recovery. Average weekly earnings came in at $861.12 in May, a month-over-month increase of 0.32%. The May reading for CPI growth was 0.44% month-over-month, therefore U.S. average weekly earnings in real terms actually fell. These figures have been a major disappointment to the market recently. The Estimize community forecasts a June reading of $862.43 representing a slight month-over-month growth rate of 0.15%. If wage growth does not accelerate, real wage growth will remain weak and erode consumer purchasing power and therefore limit the Fed’s ability to lift short term interest rates in the coming months.
The third piece of important jobs data which is released on Thursday is the unemployment rate. This indicator is often criticized for not highlighting the number of underemployed and those that have given up on their job search. The unemployment slightly increased in the month of May to 5.5% from the previous reading in April of 5.4%. Last month’s reading aside, the unemployment rate has been on a gradual decline from its peak, which it reached in the aftermath of the global financial crises. For the upcoming June reading, the Estimize community expects unemployment to stay unchanged at 5.5%.
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