US Payrolls Seen Slowing As Wage Growth Holds Firm
-Hiring to rise at slower rate in June
-Wages to grow mildly despite inflationary pressures
-Fed officials warn more hikes may be needed
-Data scheduled for Friday Thursday at 08:30 EST/12:30 GMT
By Max Head
LiveSquawk News
15:00 GMT | 01 July 2026
Data from the Bureau of Labor Statistics is expected to show the US jobs market continued to expand in June, albeit at a slower pace than last month, when leisure and hospitality helped push headline employment well above consensus levels.
The latest consensus forecast puts the headline payroll figure at 115,000, down from the 172,000 surprise in May. The unemployment rate is expected to remain at 4.3%, while economists estimate the labour force participation rate (LFPR) will remain steady at 61.8%.
Morgan Stanley noted a sharp rise in state government payrolls last month, which it attributed to poor seasonal adjustment, citing similar trends in 2025. Like last year, they expect this delay in adjustment to persist for several months, with no immediate reversal in state figures.
Citi economists, however, forecast significantly more modest payroll rises of 25,000, following strong rises over the past three months. They identified signs of softening labour demand: fewer small-business hiring plans than in recent years, declining job listings, and contractionary PMI figures.
Recent data flow
Source: ADP Reasearch
On Tuesday, the BLS’ job openings and labour turnover (JOLTs) survey showed job openings ticked marginally higher, reaching nearly 7.6 million from 7.59 million previously, a fresh two-year high, despite economists estimating a near 10% drop in May.
Wednesday's Challenger report showed job cuts for June were down 53% from 97k in May, marking the lowest monthly total since December 2025, and down 4% from last June's report. "The pace of layoffs cooled considerably in June, similar to plans last June, and as is typical for summer months," Andy Challenger clarified in the report.
By contrast. Wednesday's ADP report pointed to a softer hiring trend, with private employers adding only 98,000 jobs in June, below expectations for 120,000.
Wages and inflation
Investors will take note of June wage data to gauge how inflation pressures are easing as the US-Iran MoU is implemented and negotiations proceed. Average hourly earnings are expected to rise 0.3% on the month, holding steady on the prior, with a slight uptick on an annual basis to 3.5% after last month's Y/Y figure fell to 3.4%.
Fed reaction function
Thursday's payroll report is expected to play a key role in the Fed’s upcoming policy decision, providing evidence of the level of resilience of the US labour market.
Speaking to CNBC on Tuesday, the Fed's Hammack cautioned that the central bank would need to consider raising interest rates due to inflation concerns. On the US economy, she said, "The job market is right around full employment; growth looks good", adding that she will go into upcoming Fed meetings with an open mind.
A day later, Fed Chair Warsh reiterated that he would not be offering any forward guidance ahead of the next closed-door FOMC meeting. The newly appointed bank chief said that inflation expectations had fallen over the last four weeks, though they remain too high, adding that restoring price stability remains the Fed’s priority.
Warsh also indicated that the US labour market is steady, with a solid supply side. A read aligning with consensus will likely validate the view that the labour market is resilient, reinforcing his current hawkish tilt, with unemployment and labour participation broadly stable.
"Any material acceleration of nominal wage growth will represent a complicating development for a Fed that has emphasized patience" says BMO economist Vail Hartman.
"If wage growth starts to re-accelerate alongside stronger hiring and a declining unemployment rate, the threat to disinflation – particularly in the cyclical categories of the inflation complex would increase, thereby supporting the case that the Fed is forced to act in 2H,” Hartman added.
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-Hiring to rise at slower rate in June
-Wages to grow mildly despite inflationary pressures
-Fed officials warn more hikes may be needed
-Data scheduled for Friday Thursday at 08:30 EST/12:30 GMT
By Max Head
LiveSquawk News
15:00 GMT | 01 July 2026
Data from the Bureau of Labor Statistics is expected to show the US jobs market continued to expand in June, albeit at a slower pace than last month, when leisure and hospitality helped push headline employment well above consensus levels.
The latest consensus forecast puts the headline payroll figure at 115,000, down from the 172,000 surprise in May. The unemployment rate is expected to remain at 4.3%, while economists estimate the labour force participation rate (LFPR) will remain steady at 61.8%.
Morgan Stanley noted a sharp rise in state government payrolls last month, which it attributed to poor seasonal adjustment, citing similar trends in 2025. Like last year, they expect this delay in adjustment to persist for several months, with no immediate reversal in state figures.
Citi economists, however, forecast significantly more modest payroll rises of 25,000, following strong rises over the past three months. They identified signs of softening labour demand: fewer small-business hiring plans than in recent years, declining job listings, and contractionary PMI figures.
On Tuesday, the BLS’ job openings and labour turnover (JOLTs) survey showed job openings ticked marginally higher, reaching nearly 7.6 million from 7.59 million previously, a fresh two-year high, despite economists estimating a near 10% drop in May.
Wednesday's Challenger report showed job cuts for June were down 53% from 97k in May, marking the lowest monthly total since December 2025, and down 4% from last June's report. "The pace of layoffs cooled considerably in June, similar to plans last June, and as is typical for summer months," Andy Challenger clarified in the report.
By contrast. Wednesday's ADP report pointed to a softer hiring trend, with private employers adding only 98,000 jobs in June, below expectations for 120,000.
Investors will take note of June wage data to gauge how inflation pressures are easing as the US-Iran MoU is implemented and negotiations proceed. Average hourly earnings are expected to rise 0.3% on the month, holding steady on the prior, with a slight uptick on an annual basis to 3.5% after last month's Y/Y figure fell to 3.4%.
Thursday's payroll report is expected to play a key role in the Fed’s upcoming policy decision, providing evidence of the level of resilience of the US labour market.
Speaking to CNBC on Tuesday, the Fed's Hammack cautioned that the central bank would need to consider raising interest rates due to inflation concerns. On the US economy, she said, "The job market is right around full employment; growth looks good", adding that she will go into upcoming Fed meetings with an open mind.
A day later, Fed Chair Warsh reiterated that he would not be offering any forward guidance ahead of the next closed-door FOMC meeting. The newly appointed bank chief said that inflation expectations had fallen over the last four weeks, though they remain too high, adding that restoring price stability remains the Fed’s priority.
Warsh also indicated that the US labour market is steady, with a solid supply side. A read aligning with consensus will likely validate the view that the labour market is resilient, reinforcing his current hawkish tilt, with unemployment and labour participation broadly stable.
"Any material acceleration of nominal wage growth will represent a complicating development for a Fed that has emphasized patience" says BMO economist Vail Hartman.
"If wage growth starts to re-accelerate alongside stronger hiring and a declining unemployment rate, the threat to disinflation – particularly in the cyclical categories of the inflation complex would increase, thereby supporting the case that the Fed is forced to act in 2H,” Hartman added.