Markets Seek Macro Clues from Jobs ReportMarketsSeekMacroCluesfromJobsReport

The monthly US jobs report on Friday will reveal whether the labor market ended the second quarter with a bang, after May’s fireworks added to signs of the economy’s overall resilience against higher interest rates. Economists expect the June survey to find that employment grew by 245,000 jobs, according to forecasts. That would mark a decline from 339,000 in the previous month but show that labor demand remained strong. When the Federal Reserve last met in mid-June, Chair Jay Powell noted that while labor-market dynamics were “coming into better balance,” demand still substantially exceeded the supply of workers. Fresh evidence of a hot labor market emerged on Thursday with ADP reporting that the private sector added 497,000 jobs in June, more than double the consensus estimate.

 

Markets are looking for the jobs report, corporate earnings and other data to offer more clues on the direction of the broader economy. Inflation, banking stress and rate hikes are creating a tougher environment for consumers and businesses, yet economic activity has not suffered as much as previously feared. First-quarter GDP growth now stands at 2% on an annualized basis after the Commerce Department raised its estimate last week from an earlier 1.3%. However, resilience in the US stands in contrast to some of its peers. Economies around the world have embarked on divergent paths, and fears of recession continue to weigh on the global outlook. New research from PGIM Institutional Advisory & Solutions provides a guide for interpreting recession probabilities and assessing their market implications.