WASHINGTON – As the U.S. economic expansion enters its ninth year, Friday’s jobs report should help clarify its future path after mixed signals have emerged in recent weeks.
Americans are buying homes at a healthy pace, but car sales have fallen off. Factory production is expanding modestly, but manufacturers aren’t hiring much. And a report Thursday pointed to slower growth among services firms, such as retailers, banks and construction firms. Consumers also turned cautious in June and barely raised their spending compared with May.
Friday’s jobs report will be issued at 8:30 a.m. Eastern time. Economists forecast that employers will add a healthy 180,000 jobs and the unemployment rate will decline to 4.3 percent, matching May’s 16-year low.
Solid numbers like that would cut through the conflicting information and reinforce that the economy is in decent shape.
Here are five things to look for beyond the headline numbers:
BLACK UNEMPLOYMENT MAY HIT A RECORD LOW
In June, the African-American unemployment rate fell to 7.1 percent, the lowest in 17 years and just one-tenth of a point above its all-time low, reached in April 2000. It’s possible the rate could fall again, either matching the record or setting a new one.
That progress is typical after an economy has been growing steadily, and the unemployment rate nationwide has fallen to low levels. It suggests employers are reaching beyond their usual networks and hiring more people from disadvantaged populations.
Still, the black unemployment rate is roughly twice the white rate, which was 3.8 percent in June. That’s in line with historical averages. Blacks are more likely to be unemployed than whites at all education levels, a sign to most economists that discrimination in the job market still exists.
WAGE GROWTH WILL LIKELY REMAIN WEAK
Paychecks are growing at a subdued pace, which is unusual with the unemployment rate so low. That usually spurs employers to compete more for workers by offering higher wages and salaries.
Yet average hourly pay grew just 2.5 percent in June from a year earlier. The last time the unemployment rate was at 4.4 percent, pay climbed at about a 4 percent annual rate.
Analysts forecast that annual wage growth will actually slip to 2.4 percent in July. That’s mostly because a spurt in pay a year ago makes a large annual gain harder to achieve.
ARE AMERICANS WORKING LONGER?
The answer to that question may seem obvious to those toiling away. But the average work-week, as measured by the government, was stable for months at 34.4 hours. In June, however, that ticked up to 34.5.
That six-minute increase, spread over the U.S. workforce of about 153 million, actually translates into a lot more work. Economists say it’s the equivalent of about 300,000 more jobs.
If the work week rises again, it would suggest that employers still need more labor but can’t find all the workers they need. As a result, they are pushing their existing staffs harder.
A BIG JOB GAIN COMPLICATES THINGS
Robust hiring around 200,000 or more would be great for the economy, but it could give the Federal Reserve headaches. For months, economists have expected hiring to slow as the unemployment rate falls, leaving employers a dwindling supply of job seekers to choose from. That can act as a brake on job gains.
But if healthy hiring persists, it suggests employers are still finding plenty of workers.
Why is that a problem for the Fed? Because Fed policymakers have raised short-term interest rates three times in the past seven months, based on the idea that employers will soon have to pay more to attract workers. Higher wages can force companies to raise prices, which can lead to inflation.
The Fed has raised rates to forestall inflation. But if employers are still hiring at a strong pace, that suggests employers have plenty of workers to choose from and won’t have to raise pay. Some economists argue the Fed should keep rates low so this trend can continue and more people can come off the sidelines and find work.
WHAT’S THE STATE OF MANUFACTURING JOBS?
Manufacturing output is growing modestly, but factory job growth has stalled in the past couple of months. That could undercut President Donald Trump’s efforts to return manufacturing jobs to the United States.
Factories added jobs at a robust pace over the winter, including 22,000 in February, the most in a year. But they cut 2,000 in May and added just 1,000 in June. One culprit is automakers. Car sales have declined this year after reaching a record high in 2016, and many carmakers have been forced to lay off workers.