Key aspects to watch in Friday’s jobs report.

The US labor market has remained resilient despite various challenges, such as high inflation, aggressive interest rate hikes, pandemic aftershocks, and geopolitical uncertainties, which seemed likely to trigger a recession.

Monthly job gains have often surpassed expectations, with unemployment consistently at or below 4% for 30 months.

However, the current job market is quite different from what it was 30 months ago.

“The labor market has normalized,” said Luke Tilley, Wilmington Trust’s chief economist, in an interview with CNN. He added, “The concern would be if it worsened from here.”

Economists do not expect job gains to decline significantly when the Bureau of Labor Statistics releases June’s employment data on Friday morning. Monthly payroll gains are anticipated to remain robust but gradually slow down: Economists predict the US added 190,000 jobs last month, a decrease from the 272,000 gains in May, with unemployment remaining steady at 4%, according to FactSet consensus estimates.

However, there is increasing evidence that the economy is slowing, consumer spending is decreasing, and workers feel less secure. Therefore, Friday’s report could be crucial in determining if the job market is stable or even at a pre-pandemic level, or if it is weaker than it appears.

“As long as job gains continue to show a gradual cooling, this economy is in good shape,” said Nela Richardson, ADP’s chief economist, during a call with reporters on Wednesday, following the payroll processor’s latest report, which showed that job and wage gains slowed in the private sector.

ADP estimated that private employers added 150,000 jobs last month, down from 157,000 in May.

“If we see the cooldown go from gradual to steep, I think that’s a warning,” she said.

Whether the two surveys will still present different narratives.

In May, the two surveys that contribute to the monthly jobs report seemed to be telling different stories: The business survey indicated that employers were adding jobs at a strong pace, while the household survey showed a 408,000 drop in employment.

Economists consider the establishment survey the “gold standard,” whereas the household survey, which offers more demographic details and contributes to the unemployment rate, is seen as more volatile due to its smaller sample size and declining response rates.

“The establishment and household surveys are continuing to show diametrically opposed pictures of the labor market,” wrote Dean Baker, economist and co-founder of the Center for Economic and Policy Research, in a note earlier this week.

“The persistence of this large divergence is disconcerting,” he added. “Most other data seem to fit better with the establishment survey, although we are seeing evidence of a weakening labor market.”

Signs of this weakening include fewer job openings, reduced hiring, fewer people changing jobs, and a steady increase in layoff activity in recent weeks.

Are permanent job losses increasing?

Last week, an estimated 238,000 first-time claims were filed for unemployment benefits, an increase of 4,000 from the previous week, according to Department of Labor data released on Wednesday. This increase brought the four-week average of initial claims to its highest level since August 2023.

Additionally, Americans are remaining unemployed for longer periods: continuing claims, filed by people who have received benefits for at least a week, rose to their highest level since November 2021.

The ongoing rise in claims has led Tilley to closely monitor a specific datapoint in the monthly jobs report: unemployed persons by reason for unemployment.

“On a three-month average basis, it’s up about 200,000 people from last year,” Tilley said. “And that metric of permanent job losers, year-over-year, is almost never positive in an expansion. It was never positive between 2010 and 2019; it was not positive between the tech crash recession of 2001 and then 2008.”

He added: “When you look more closely at what appears to be strong job growth in raw numbers, it reveals a labor market that has normalized and is at risk of slipping.”

However, other measures of layoff activity haven’t shown a concerning spike.

US-based employers announced fewer job cuts last month compared to May, but layoff reports are still trending higher than last year’s, according to data released Wednesday by Challenger, Gray & Christmas.

The outplacement and workplace research firm reported 48,786 cuts announced in June. This is down nearly 24% from the 63,618 cuts announced in May, but 19.8% higher than the 40,709 cuts announced in June of last year.

How immigrants impact the labor market.

Since August 2022, monthly payroll gains have averaged 250,000, significantly higher than the 2019 average of 164,000, according to Julia Pollak, chief economist at ZipRecruiter.

“We’re achieving much higher job growth with about the same unemployment rate, at a time when the native-born population is stagnant,” Pollak told CNN via email. “One key reason is immigration and its effect on labor supply.” Immigrants accounted for 43% of the labor force gain in 2024, Rachel Sederberg, senior economist at labor market research firm Lightcast, told CNN Business. In May, that share surged to 280%, as immigrant gains more than compensated for native-born workers leaving the labor force, she said.

Immigrant job gains have become a contentious issue in the presidential election. During a CNN debate last week between President Joe Biden and former President Donald Trump, Trump falsely claimed that all job gains since Biden took office were made by illegal immigrants and “bounce-back jobs.”

“Most research does not find that immigration harms employment outcomes for native-born Americans because immigrants are both consumers and producers of goods and services. They may increase job competition in some areas, but they also increase demand for goods and services, which creates jobs,” Pollak noted.

Other indicators to monitor.

Here are some other indicators to monitor:

1. Average Hourly Earnings: Workers’ pay gains have been slowing down, with expected month-on-month gains around 0.3% in June (down from 0.4% in May). Annual gains are also anticipated to cool to 3.9% from 4.1%. This indicator is closely watched by Federal Reserve officials as a potential inflationary pressure.
2. Labor Force Participation Rates: Although prime working-age women have seen record-high employment recently, overall labor force participation rates remain below pre-pandemic levels. The rate dipped to 62.5% in May from 62.7%, reversing earlier progress made this year.
3. Part-time Workers: There’s a trend towards hiring more part-time workers, according to data from employment site Indeed. The number of involuntary part-time workers, who seek full-time hours but cannot find them, has increased recently. This could indicate a softening labor market, although the overall number of involuntarily part-time workers remains relatively low.

These indicators provide additional insights into the current state and trends of the labor market beyond just job gains and unemployment rates.