forecasts for the july us jobs report call for yet another month of healthy gains in the labor market with no signs of a recession still if the report comes in on target economists see little reason for the federal reserve to respond with yet another increase in interest rates from their alreadyhigh levels while job growth is solid it is down from peak levels and as long as inflation continues its moderating trend that should keep the fed on the sidelines “the reality is that the labor market is strong and that’s a big part of the reason the economy has been so resilient” says alliancebernstein chief economist eric winograd after the june jobs report showed solid increases economists expect another round of similar gains nonfarm payroll employment is expected to increase by 200000 according to factset’s consensus estimates this follows an increase of 209000 in june and it would be down substantially from the 339000 increase seen in may “while the labor market has been strong there is some evidence that it is gradually starting to decelerate” winograd says “i don’t want to say ‘weakened’ because it isn’t weakening it is getting strong at a slower pace”   nonfarm payroll employment to rise by 200000 versus the 209000 increase in june according to factset   unemployment rate to come in at 36 seeing no change from june   hourly earnings to rise 03 slowing from 04 in june the monthly jobs report is also notoriously volatile and consensus forecasts are often off by a wide margin winograd notes that going back to early 2022 economists have tended to underestimate the pace of job growth “forecasters have been too low 14 out of the last 15 months” economists predict the unemployment rate will remain at 36 in line with levels seen since early 2022 kevin nicholson a chief investment officer at riverfront investment group points to the rate at which employers are filling in vacancies as a factor keeping the unemployment rate steady “we’re replacing workers at the same level as we are adding more groups in the sense that you have retirees that roll off payrolls and you have new workers that are added to the payrolls” he says nicholson also says he will keep a close watch on household employment which includes people launching their own businesses or taking on side hustles “they’re not going to get counted in payroll for the nonfarm payroll numbers and so looking at that household employment is important for us to be able to tell how well is the economy doing and what is the actual strength of the market” he explains recession still further out nicholson also says that being in a strong labor market “allows more time for corporations to be able to adapt to market conditions” companies lowering their input costs are still able to price their products high for longer while inflation comes down which he says will help their profitability “as long as people are employed and they’re spending that’s going to help those corporations and is going to help earnings” nicholson adds “that’s going to have a knockon effect and push a recession further out” despite strong jobs market fed seen on hold “if the labor market is too strong and the fed has to raise rates much more that could cause a recession but i think we’re a long way from that outcome” winograd says winograd adds that one aspect of the fed’s ratehike effort is its goal to bring better balance between the number of job openings and the number of americans entering the workforce “if the labor market does rebalance or continues to rebalance as they expect then they probably won’t have to raise rates any further” winograd says for now the general expectation in the bond market is that the fed will hold interest rates steady at its sept 1920 meeting according to the cme fedwatch tool which tracks traders’ bets on the direction of interest rates there is an 805 chance the fed will leave rates unchanged the fed raised the federalfunds rate by 25 basis points during its federal open market committee meeting on july 26 bringing its target rate to a range of 525550 “the strong labor market gives the fed cover to continue to raise rates and normalize rates” nicholson says “we are a nation of consumers and as long as employment is strong people are going to spend that’s going to put upward pressure on inflation that will cause the fed to have to either have an additional hike or at the very least keep rates higher for longer”