Non-Farm Payroll Report Highlights Preview - Alarm Bells Sounding for the Collapse of the U.S. Job Market, Will the Federal Reserve Be Forced to Cut Interest Rates in July?

Every summer, Americans take vacations and have fun, and the unemployment rate is high!
1. Whether overall employment growth exceeds expectations and slows down - the median expectation for non-farm new jobs in June is 110,000 (with an expected range of 50,000 to 160,000), which is lower than the previous value of 139,000. If the data falls below 100,000 or even shows negative growth, it may cause panic in the market. Well-known investment banks such as Goldman Sachs, Citigroup, Jefferies, Bank of America, and Standard Chartered all expect that the number of non-farm new jobs will be below 100,000.
2. The risk of historical data revision, with the non-farm data for April-May potentially facing downward revision risks due to delays in small business statistics, particularly in the leisure hotel industry, which requires attention to the extent of the revisions. Additionally, trends may be more important than the extent, as the average number of new non-farm jobs over the past three months has dropped to 135,000, lower than the 186,000 from the same period last year.
3. Will the unemployment rate rise and approach the post-pandemic high? - Last week, the number of people continuing to claim unemployment benefits in the U.S. rose to 1.974 million, the highest since November 2021. Coupled with last night's ADP data showing negative growth, it indicates that the unemployment rate will increase. If the unemployment rate rises to 4.3%, it will reach the highest level since July of last year and will be close to the October 2021 peak of 4.6%.
4. Is wage growth cooling down? Goldman Sachs pointed out that several wage tracking indicators in the market show that wage growth has fallen below 3%, and the market generally expects the monthly wage growth rate to drop from 0.4% to 0.3%. If tonight's data confirms the slowdown in wage growth, it will strengthen the evidence of declining inflation and support the Federal Reserve's interest rate cuts.
5. The impact on Federal Reserve policy, the probability of a rate cut by the Federal Reserve in July is only 27.4%. If the non-farm data is extremely weak, it will raise the probability of an early rate cut in July by the Federal Reserve; if the data is strong, the rate cut will take place in September. Powell also recently stated in a speech that "no actions are ruled out at any meeting."
6. Industry Differentiation and Weakness in the Service Sector - ADP data shows that employment in the service sector decreased by 66,000 in June, with significant drag from professional services and the healthcare and education sectors, while employment in manufacturing and construction sectors increased. Furthermore, the growth in employment in the leisure and hospitality sector in May was particularly notable, but Bank of America economists warn that this industry may see a reversal in June as consumer spending on travel and related services has slowed.