Forecasters expect to see a modest pickup in job growth Friday when the Labor Department releases its monthly jobs report. Economists surveyed by Reuters predict employment gains of about 160,000 in June, after disappointing job growth the month before.
U.S. employers added just 75,000 jobs in May, less than half the average of the first three months of the year and less than a third the pace of job growth at the end of last year.
"We're still seeing a moderation from the pace that was set in 2018," said senior economist Sarah House of Wells Fargo Securities. "The story is how much of the global slowdown, and maybe some of the saber-rattling over trade, has affected employment."
Manufacturing and transportation are especially vulnerable to disruptions from trade battles. Employers added just 3,000 factory jobs in May, while employment in the transportation and warehousing sector shrank.
Friday's jobs report reflects conditions in the middle of June, after the threat of tariffs on Mexico was lifted, but before President Trump met with Chinese President Xi Jinping last weekend and agreed not to impose tariffs on an additional $300 billion in Chinese imports.
"I think we're probably in for some stabilization," House said, as employers respond to the temporary truce. But she cautioned the fundamental trade dispute between the U.S. and China has not been resolved.
"We're seeing uncertainty linger in the background," House said. "That's likely to impact businesses' investment decisions but also their willingness to bring on new workers."
Surveys released this week showed that trade battles are creating a drag not only on U.S. factories but also the much larger services sector of the economy. But neither showed signs of actual contraction.
"Even with some of these headwinds, we think overall the economy remains in pretty good shape," House said, suggesting the decade-old economic expansion still has room to run.
At 3.6%, unemployment is the lowest it's been in nearly half a century.
Wages have been growing at an annual rate of just over 3%, outpacing inflation, which is less than 2%.
"That's good for consumer spending," House said, which is a major pillar of the U.S. economy. "Overall, the labor market still remains pretty tight, even as we've seen the pace of jobs downshift."