×

Four key things to watch in Friday’s jobs report

  • The government releases its June jobs report on Friday. Economists expect to see that 172,000 jobs were added to nonfarm payrolls.
  • Economists will be watching closely to see if job growth improves under a Trump presidency.
  • Four key things to watch in Friday's report: the unemployment rate, wage growth, the retail sector and the manufacturing sector.

Home Depot cashier at a Miami store.
Getty Images
Home Depot cashier at a Miami store.

When the U.S. Labor Department releases the June employment report on Friday, it will tell us whether job growth is improving.

Last year (when President Barack Obama was still in office), monthly jobs creation averaged nearly 187,000. So far in 2017, as President Donald Trump has occupied the White House, the economy has added an average of 162,000 a month, slowing even more abruptly in the past three months. Not only was the May nonfarm payrolls number of 138,000 jobs weaker-than-expected, but there were downward revisions for both April and March.

The market is currently expecting Friday's jobs report from the Labor Department to show 172,000 jobs were added to nonfarm payrolls in June, according to Reuters.

Thursday's ADP report, which measures private-sector job creation, showed that 158,000 private-sector jobs were created last month, below expectations of 185,000.

Aside from the headline number, here are four key things to watch for in Friday's jobs report:

1) The unemployment rate

Let's remember that a 4.3 percent unemployment rate is traditionally associated with full employment. Economists surveyed by Reuters expect the rate to hold at that level for June.

A lack of qualified workers in certain sectors and locations around the nation and the low labor force participation rate are among the factors that weigh on the unemployment rate. But with economic growth expected to pick up in the second quarter, that could keep the unemployment rate in check.

2) Wage growth

Main Street and Wall Street continue to ponder whether wage growth, as measured by average hourly earnings, will ever get back above the 3-percent level.

Even with the unemployment rate well below 5 percent, the much hoped-for wage gains have yet to substantially materialize. Average hourly earnings have risen 2.5 percent over the past year through May.

3) The retail drag

Among sectors, we continue to see retrenchment in retail with more than 51,000 jobs lost in the past three months alone. The shift to online sales appears to be accelerating, taking a toll on store chains and employees while leaving empty store fronts in malls, strip centers and elsewhere. The recent Amazon-Whole Foods deal was an alarm bell telling us that, if anything, the consumer's shift from brick-and-mortar to online is only going to pick up speed. That could take a toll on the overall job growth number.

4) Faulty factory focus?

Amid all of the hopes attached to the goods-producing sector (construction, manufacturing and mining), the U.S. has averaged fewer than 20,000 jobs created there over the past three months. This serves as a reminder that this isn't your parents' (or grandparents') manufacturing sector. Automation and globalization have transformed the nation's factories in ways that mean the legions required to produce goods in the past are no longer needed. More training, or better skills, are needed for the jobs that must be filled in the modern, technology-reliant era.

Commentary by Mark Hamrick, senior economic analyst and the Washington bureau chief for Bankrate.com. He was recently named president of the Society of American Business Editors and Writers (SABEW), a leading organization of business journalists. Follow Mark Hamrick on Twitter @hamrickisms.

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.