{"id":11220,"date":"2026-05-29T17:06:03","date_gmt":"2026-05-29T17:06:03","guid":{"rendered":"https:\/\/www.rbc.com\/en\/economics\/?p=11220"},"modified":"2026-05-29T17:10:38","modified_gmt":"2026-05-29T17:10:38","slug":"jobs-report-in-focus-as-the-labor-market-holds-its-ground","status":"publish","type":"post","link":"https:\/\/www.rbc.com\/en\/economics\/us-week-ahead\/jobs-report-in-focus-as-the-labor-market-holds-its-ground\/","title":{"rendered":"Jobs report in focus as the labor market holds its ground"},"content":{"rendered":"\n
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Next week, the May employment report will be front-and-center. We expect 99K jobs were added to payrolls with the unemployment rate holding steady at 4.3%.<\/strong> So far in 2026, the labor market appears to be on solid footing. Still, on aggregate, new job creation has been quite limited with monthly payroll gains averaging 55K over the past six months. But the interpretation of payroll gains is changing.<\/p>\n<\/div><\/div>\n<\/div>\n<\/div>\n\n\n\n

Our estimate of breakeven employment<\/a> remains exceptionally low, as retirements create openings<\/a> that when backfilled, don’t show up as a payroll gains. Coupled with the precipitous fall in immigration, the labor market needs far fewer new jobs for the unemployment rate to hold steady. In this lens, we expect the Fed will rely more on the unemployment rate than the payroll report to gauge labor market health.<\/p>\n\n\n\n

A key risk remains coincident oil<\/a> and tariff<\/a> shocks: if firms cannot pass on higher input costs, margin compression could translate to headcount reductions. By our calculation<\/a>, the US economy would need to shed 1 million jobs by year-end for the unemployment rate to rise sufficiently to trigger the Sahm rule. This would require all sectors to respond to higher costs with layoffs rather than price increases \u2013 and for now that is not playing out. PPI has re-accelerated dramatically in 2026, confirming that passthrough is happening. Limited layoffs, as evidenced by stable jobless claims data, have helped keep the unemployment rate from rising. Still, the unemployment rate is rising for some groups \u2013 most notably recent graduates <\/a>who are facing competition from AI.<\/p>\n\n\n\n

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Aside from the jobs report, here\u2019s what else we\u2019re watching next week:<\/p>\n\n\n\n