If economists surveyed by the Wall Street Journal, Bloomberg and MarketWatch are gauging the economy correctly, the May employment report, due out Friday, will track another month of job gains topping 200,000.
Such a development could help blunt the effect of Friday’s news that U.S. economic activity was not only weak in the first quarter, but that the gross domestic product actually shrank by 0.7 percent. Harsh weather and a labor dispute at West Coast ports hurt the economy during the winter months, but the nation has put those problems behind it.
"We remain skeptical about the sudden-deterioration signal" in Friday's GDP report, Jim O'Sullivan, chief U.S. economist of High Frequency Economics, told USA Today.
Economists in the Bloomberg survey are predicting a May job gain of 225,000. Those consulted by the Wall Street Journal are forecasting an increase of 220,000, and those surveyed by MarketWatch expect a gain of 218,000.
All three groups of economists expect the unemployment rate to stay at 5.4 percent, a seven-year low.
The take in a MarketWatch report is that job growth has been the brightest spot in the economy, with an average monthly gain of 243,000 since last year. The jobs report “is the best single bellwether of how the economy is doing,” MarketWatch said. “The official report on gross domestic product appears to have significant flaws, and it's generally viewed as more backward-looking.”
Federal Reserve Chairman Janet Yellen said in a speech in Providence, R.I., last month that the Fed still expects to raise interest rates this year.
"If the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target," Yellen said, but she acknowledged that the economy’s uneven pace is delaying that decision.
"A number of economic headwinds have slowed the recovery, and to some extent, they continue to influence the outlook," she said.
A Bloomberg report said declining inflation measures suggest that the Fed will not act until at least late this year.
“We don’t have enough momentum in the economy to maintain sustainable inflation,” George Goncalves, head of interest-rate strategy at Nomura Holdings Inc., one of 22 primary dealers that trade directly with the Fed, told Bloomberg. “The market is viewing this as: be cautious, be gradual, don’t rush into this.”
The Wall Street Journal said a key part of Friday’s unemployment report, particularly for the Fed, will be data on average hourly earnings.
Pay growth has been limited to about 2 percent during the recovery from the recent recession, and the Journal said “Fed leaders want to see wage growth accelerate above 2 percent as a sign of healthy labor markets.”
On Monday, the Commerce Department reported that consumer spending was unexpectedly flat in April, although construction spending gained during that month and manufacturing activity rose in May.
Reports out today will track factory orders for April and motor vehicle sales for May. On Wednesday, the Commerce Department will report on the trade deficit for April.