Job openings, additions, inflation impact top investor watch list

Investors are gearing up for a busy week of jobs data with the May JOLTs report on Wednesday morning and the June jobs report on Friday. 

According to consensus estimates from Trading Economics, Wall Street is expecting a total of 11 million job openings as of the end of May, down from 11.4 million job openings the prior month.

Meanwhile, economists surveyed by Refinitiv are expecting the Labor Department to say that the U.S. economy added 268,000 new nonfarm jobs in June, down from the stronger-than-expected 390,000 in May.

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Thru the Cycle president John Lonski predicts that the total number job openings will fall to 10.8 million in May and that the U.S. economy will add 240,000 jobs in June. 

His estimates reflect an anticipated slowdown in hiring activity due to higher costs driven by inflation and businesses being more cautious about their hiring plans given the increased risk of a potential recession. 

"Anecdotal evidence strongly suggests that we will have significantly fewer job openings compared to the prior month in June and likewise will see smaller additions to payrolls," he told FOX Business. "It could very well be that payrolls growth has peaked for the current cycle." 

Meanwhile, First Trust Advisors deputy chief economist Bob Stein told FOX Business that the firm is expecting a nonfarm payroll increase of 275,000. 

"That’s slower than the trend so far this year and would be the weakest job growth in 14 months," he says. "However, it should also be consistent with continued economic growth, not a recession.  We think a recession is headed for the US economy but is unlikely to hit this year." 

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Accord to Lonski, jobs growth during previous recessions has been roughly equivalent to an average increase of 100,000 jobs or fewer per month, a level he refers to as "the danger zone." 

"If this report is such that the gain in payrolls is 100,000 or fewer, that would definitely ring a very loud recession alarm," he explained. "A weak enough employment report might prompt the Fed to rethink their current projection as to where the Fed funds rate ends the year. It also may prompt the Fed to rethink their planned passive reduction in their holdings of U.S. Treasury bonds and mortgage-backed securities."

Last month, the Federal Reserve raised its benchmark interest rate by 75 basis points for the first time in nearly three decades in an effort to tame scorching-hot inflation. The move puts the key benchmark federal funds rate at a range between 1.50% to 1.75%, the highest since the pandemic began two years ago.

Officials also laid out an aggressive path of rate increases for the remainder of the year. Economic projections released after the Fed's two-day meeting showed policymakers expect interest rates to hit 3.4% by the end of 2022, which would be the highest level since 2008.

Fed Chairman Jerome Powell told reporters at a press conference following the meeting that another increase of 75 basis points or 50 basis points is on the table for its July meeting. 

Goldman Sachs, Bank of America and Deutsche Bank have all raised the odds of a downturn in 2022 or 2023.