Update, June 6, 2024: This article has been updated to include additional analysis from economists.

The hot job market cooled considerably in April, and forecasters expect hiring continued at its new, slower pace in May. 

Employers likely added 190,000 jobs in May, close to the 175,000 added in April, a report Friday from the Bureau of Labor Statistics will show, according to forecasts by economists surveyed by Dow Jones Newswires and The Wall Street Journal. The median forecast called for the unemployment rate to stay at 3.9%, close to historic lows.

If forecasters are correct, the report could add to recent evidence that the labor market is settling into a slower rhythm—though not crashing—as the Federal Reserve’s campaign of anti-inflation interest rate hikes drags on business and consumer spending. The projected number of jobs added would be well below the 394,000 jobs per month the economy has added every month on average since 2021. 

Recent data on hiring, layoffs, and quitting has shown that while layoffs remain scarce, few employees are quitting their jobs. That suggests job-hopping for higher wages is becoming harder to do than it has been in the earlier post-pandemic labor market, where workers were in high demand.

“When the labor market is tight, job growth tends to slow disproportionately during the spring hiring season and particularly in May—when the seasonal factors expect more hiring than is realistic with fewer workers available—and all five of the alternative measures of employment growth we track suggest a below-consensus report,” wrote Goldman Sachs analysts Thursday. 

Federal Reserve May Like Slower Job Growth

That’s exactly what officials at the Federal Reserve have hoped to achieve since last July by holding the fed funds rate at a 23-year high—by putting upward pressure on interest rates on all kinds of loans, they hope to discourage borrowing and spending, which should help slow the annual inflation rate down to the Fed’s 2% target.

A cooler labor market with slower wage growth would help achieve this goal, and wouldn’t be as painful for workers as a recession and mass layoffs, which historically have been the result of the Fed’s aggressive rate-hike campaigns. 

However, if the market slows too much, that could be a cause for concern.

“It will get interesting if job growth surprises noticeably to the downside and there is not a noticeable upward revision to April. This would raise financial markets concerns that the economy is slowing abruptly, and catch the Fed’s attention as it is aware of the risks that a softening labor market poses to the broader economy,” wrote Oxford Economics’ Ryan Sweet.

However, a labor market chugging along with no layoff wave in sight would encourage Fed officials to keep rates higher for longer to keep the pressure on inflation because there would be little inducement to reduce rates to stimulate the economy in order to stem job losses. 

“If our forecasts are close to the mark it would continue to point to a resilient labor market that argues for patience with respect to reducing rates,” Brett Ryan and other economists at Deutsche Bank wrote in a commentary.