On-screen text: May jobs. Report out 8:30 a.m. Friday. Hiring steady, pay down. AI's impact on jobs.
Narrator: How can the labor market look resilient but also somewhat weak at the same time?
So, the May jobs report is the main focus for investors this week for a few reasons.
Number one, since the start of the war in Iran, the U.S. economy has actually added 300,000 jobs. That's not the strongest relative to history, but considering a relatively unstable global backdrop, that's actually pretty good and shows some signs of resilience.
Number two, I think investors are still going to look for the signs that AI is impacting the labor market in terms of hiring activity and a pick-up in layoffs. So far, that's really only the case for the tech sector. You can't really say that for the broad swath of industries in the U.S.
And number three, I think that what is going to become top of mind for the labor market as we come into the summer is the fact that inflation-adjusted average hourly earnings growth continues to slide and is in negative territory.
And I think that's going to create even more of an uncomfortable dynamic in the labor market, where on the one hand you do have a relatively resilient hiring backdrop, but on the other hand, you have wage growth that continues to slide and put downward pressure on consumer sentiment.
We don't think that dynamic gets resolved in [the] May [jobs report], but it is something to watch moving forward, especially as inflation continues to drift higher.
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