Is the US job market beginning to weaken? Friday's employment report may provide hints

Tentative signs have emerged that the U.S. economy is cooling in a way that would be welcomed by the Federal Reserve's inflation fighters: Companies are posting fewer available jobs, consumer spending has slipped and wage growth, while still healthy, is gradually slowing.

Those trends mark a contrast from the start of the year, when hiring was robust and Americans were still spending at a solid clip — factors that may have also helped keep inflation stickier than the Fed wanted. Yet with the economy no longer accelerating, economists and financial markets have begun to worry about the opposite scenario: What if the economy weakens more than is needed to cool inflation? Could it eventually turn into a recession?

The U.S. jobs report for May, which the government will issue Friday morning, may offer some insights. Economists have forecast that the report will show that employers added 180,000 jobs in May, about the same as the 175,000 for April. The unemployment rate is expected to have remained at 3.9%, which would mark the 28th straight month in which the rate has stayed below 4% and would be the longest such streak since 1953.

“It's going to be interesting to understand if the economy is running out of gas or coasting into summer solid hiring,” said Nela Richardson, chief economist at the payroll processor ADP.

Richardson spoke Wednesday after ADP released its own data for May, which showed that employers — excluding government agencies — added 152,000 jobs last month.

If May's hiring data comes in close to economists' forecasts, it would fall well below the average monthly gain of 269,000 in the first three months of 2024. Still, a figure of around 180,000 would probably be welcomed as sufficient to keep the economy