May Jobs Report to Be Released Friday: What to Expect

• May layoffs totaled 97,006, up 16% from April and the highest for the month since the 2020 pandemic, with AI-related job cuts reaching a record 38,242
• Major firms forecast significantly below consensus: Goldman Sachs expects 60,000 jobs, Vanguard predicts just 20,000, and EY-Parthenon forecasts 50,000 due to unwinding of weather-related gains
• The Federal Reserve is expected to maintain its pause through year-end regardless of the jobs number, with markets pricing near-zero chance of a rate move at the June 16-17 meeting and increased odds of a hike in early 2027 if inflation persists

Summary: May Jobs Report Preview

Key Expectations:

The May nonfarm payrolls report, due Friday, is expected to show significant weakness in job creation. Economists surveyed by Dow Jones forecast just 80,000 jobs added, down from the 150,000 monthly average over the prior two months. Some Wall Street firms project even lower figures: Goldman Sachs expects 60,000, EY-Parthenon anticipates 50,000, and Vanguard forecasts only 20,000 new jobs.

Market Context:

The consensus unemployment rate is expected to hold steady at 4.3%, though some analysts see potential for a slight increase to 4.4%. The anticipated slowdown reflects a "low-hire, low-fire" labor market where job security remains reasonable for employed workers, but job seekers face significant challenges.

Contributing Factors:

• Earlier 2026 job gains may have been artificially boosted by unseasonably warm, dry weather
• Elevated layoff activity: May saw 97,006 planned job cuts, up 16% from April—the highest May total since 2020
• AI-related job cuts reached 38,242, the highest single-month total since tracking began three years ago
• Initial jobless claims hit their highest level since early February
• Job quits at lowest level since August 2020

Federal Reserve Implications:

The weak jobs data is unlikely to prompt Federal Reserve action. Markets price in virtually no chance of a rate move at the June 16-17 FOMC meeting, with expectations the Fed will maintain its pause through year-end. However, persistent inflation alongside labor market weakness may prompt more hawkish Fed positioning, potentially raising odds of rate hikes in early 2027.