June Employment Report Preview

Job gains in June should take a step back from the pace we have seen in the past few months, with payrolls increasing by 83k (with the three-month average of the prior three months at 135k). Given the wide swings in immigration over the past few years, it’s hard to pin down exactly the rate of payroll gains that is consistent with a stable labor market and keeps up with population growth, but the three-month moving average of 135k is likely within or at the top of that range. We expect gains to continue to be concentrated in Private Education and Health Services and Leisure and Hospitality, but with Leisure and Hospitality growth to slow from May’s very strong number. Consumer spending on services, especially in discretionary categories, has lagged in recent months indicating less need going forward for L&H jobs to continue expanding at the pace seen in recent months. Other cyclical sectors as well as trade-sensitive sectors are expected to remain weak. Immigration will likely be a drag on June payrolls, with d eportations and worksite raids increasing from prior months, which could have the effect of temporarily taking workers out of the job force .