Despite multiple signals that the labor market has slowed down dramatically over the past month, analysts expect the rate of monthly payroll additions to tick up ever so slightly in May to 180K, although remain far below recent averages. With the unemployment rate expected to remain unchanged, wage growth is seen accelerating fractionally on a monthly basis, but remaining unchanged on an YoY basis: as Newsquawk notes, analysts have noted that the Quits Rate in the most recent JOLTs data (for April) is consistent with a moderation in wage pressures ahead.

Other labor market proxies have been mixed in the month, with jobless claims little changed in the survey windows that coincide with the jobs report; elsewhere, the ADP’s gauge of payrolls disappointed to the downside, while ISM surveys both saw a modest tick up in the employment subindex, with the manufacturing sector’s gauge back into expansion territory. Meanwhile, the consumer view of the jobs market has improved in the month. The market reaction will be based on the combination of headline NFPs and the wage metrics; if both came in hot, analysts think it would pressure risk assets, and Treasury yields could rise; conversely, a miss on both may support Treasuries, but equities could succumb to the growth concerns narrative, although Goldman's derivatives desk believes that dealer positioning would lead to a jump in risk prices in either case.

Let's take a closer look at the expectations: