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The Employment Situation Report for June 2023 will be released on Friday July 7. May’s data showed that the U.S. economy continued to add over 300,000 jobs. This was a strong result which was welcomed by markets, especially when combined with positive revisions to monthly job growth for the months of March and April. However, unemployment rate did move up to 3.7% testing the higher end of the range for the unemployment rate that we’ve seen since March 2022.
The Sahm Rule
The increase in the unemployment rate may be statistical noise, but weekly data on unemployment claims has trending somewhat higher too. This may matter, because the Sahm rule for forecasting recessions signals that if the 3-month average of unemployment rises by 0.5% over its 12-month low, then we may be in a recession. This metric has a strong track record of forecasting recessions historically.
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