Forecasters anticipate a monthly report on US employment will show slower hiring and the highest unemployment rate since 2021 as the Trump administration’s trade and immigration policy shifts start to leave an imprint.

Payrolls probably rose by 106,000 in June — which would be the slowest gain in four months — following May’s 139,000 increase, according to the median estimate in a Bloomberg survey of economists. The jobless rate is seen edging up to 4.3%.

Such numbers, in a report due Thursday from the Bureau of Labor Statistics, would keep Federal Reserve officials on track to delay interest-rate cuts until September as investors currently expect, according to futures. Any signs of a faster deterioration, however, would raise bets on an earlier move at the central bank’s upcoming July 29-30 policy meeting.

“A weaker job market in June is a sign of what’s to come,” Nancy Vanden Houten, the lead US economist at Oxford Economics, said in a note. “We expect trend job growth to weaken through the remainder of this year because of tariffs and high policy uncertainty.”

Here’s what to watch for in key components of the report:

Unemployment Rate

With major changes underway in the areas of federal trade and immigration policy, economists are split on whether and how much the unemployment rate — perhaps the most consequential indicator in the report for Fed policy — rose in June.

Most leading indicators suggest an increase in joblessness. The number of recurrent filings for unemployment insurance rose during the week that data for the monthly report was being collected to almost two million, the most since November 2021.

Notices of impending layoffs — filed by businesses as required by the Worker Adjustment and Retraining Notification Act — jumped by 61% in May, to the highest level since October 2020. And although ADP Research private payroll numbers aren’t meant as a predictor of the government figures, they surprised with a decline last month, the first drop in more than two years.

Reports also suggest the summer hiring season for college graduates — a cohort that has increasingly struggled to find work in recent years — is off to a rough start. Citigroup Inc. economists — who project a jump in the unemployment rate to 4.4% — see that as a potential factor.

“Continuing jobless claims are rising and may understate unemployment since those who have newly entered the workforce show up as unemployed but will not qualify for unemployment benefits,” Andrew Hollenhorst, the chief US economist at Citi, said in a note.

On the other hand, the Trump administration’s efforts to halt immigration and step up deportations may help keep a lid on the unemployment rate, as slower hiring is matched with a slower expansion of the workforce — depressing both the numerator and denominator of the calculation simultaneously.

That seemed to be the case in the May report, as the unemployment rate held at 4.2% while the labor force participation rate dropped to 62.4%. Economists at Morgan Stanley see that dynamic keeping unemployment unchanged once again in the June figures.

“Unauthorized immigrants and their households may choose less participation to lessen exposure and lessen the chances of deportation,” a Morgan Stanley team led by the bank’s chief US economist, Michael Gapen, said in a note.

“If last month’s drop in labor force participation persists into June, it would be further support for that idea,” they said, adding that the unemployment rate would have been 4.7% if not for the outsize drop in the participation rate.

Sector Breakdown

The range of estimates for monthly hiring in the Bloomberg survey is the narrowest since 2018, indicating widespread consensus on the expected slowdown.

Forecasters flagged a wide range of sectors — including leisure and hospitality, health care, construction, manufacturing and trade and transportation — to watch in June.

Leisure and hospitality in particular was a strong spot in the May report, posting the biggest hiring figures in six months. Some economists, including Shruti Mishra at Bank of America and Joe Brusuelas at RSM US, noted that could revert in June amid a slowdown in consumer spending on tourism and travel-related services.

What Bloomberg Economics Says...

“Details may show that hiring in private service jobs slowed in June, reflecting a pullback in consumer spending on services. We may not see much impact on payrolls from the trade war, as the logistics sector appears to be holding up well as firms continue stockpiling inventory.”

—Anna Wong, Estelle Ou, Chris G. Collins

Samuel Tombs and Oliver Allen, economists at Pantheon Macroeconomics, also flagged the risk of downward revisions to hiring figures for April and May. They attributed it to the possibility that small businesses, which have struggled more than others, are filing late survey responses to the BLS. And the leisure and hospitality industry, where many firms are small, accounted for the bulk of recent downward revisions.

“Revisions to payrolls after two more months of data collection are often substantial, and for the last two-and-a-half years they have been skewed to the downside,” Tombs and Allen said in a note.

“Whatever the cause of the revisions, the established pattern means it makes sense to subtract about 30K from the first estimate of June payrolls on Friday, and to focus on the trend rather than one month’s numbers,” they wrote.