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On Friday, the May official employment report will be released. According to analysts at Wells Fargo, the employment data should continue to show ongoing distress in the labour market.

Key Quotes: 

“While not anticipated to be as quite as dramatic as April’s record-setting performance, the May employment report should still show severe ongoing distress in the labor market. Nonfarm employment is poised to slice another sizeable amount off payrolls in May. Our call of -8M jobs is spot on the consensus estimate.”

“Job losses should remain broad based, though the predominate share should come from the services sector.”

“The unemployment rate should jump further in May, our call is 20%. Job losses will continue to be tilted toward workers and industries with lower compensation. As such, we expect average hourly earnings to be boosted further by a compositional effect, 1.5% m/m, though not by as much as was seen in April.”

“As states continue to ease restrictions and firms re-open–accounting for the new social distancing environment–we expect the labor market to improve in the coming months. That said, it will still likely take a number of years for the labor market to fully recover from its pandemic-induced meltdown.”