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Five things to watch in June jobs report

225,000 job gain forecast, unemployment seen falling to 5.4%

(MarketWatch) — Mounting evidence points to another strong increase in U.S. jobs in June. How strong? Here are five things that will give us a clue.

Trend in hiring

After a tepid 119,000 increase in new jobs in March, the U.S. produced a much healthier 221,000 new jobs in April and 280,000 in May.

In June, economists polled by MarketWatch forecast a 225,000 gain. They also see the unemployment rate dropping a notch to 5.4% from 5.5%. The Labor Department will release the data at 8:30 a.m. Eastern on Thursday.

An even stronger increase might be in the cards. Large payroll processor ADP said the U.S. added the most jobs in June since the end of 2014, and a gauge that measures manufacturing employment rose to the highest level in six months.

Rising wages

The average hourly pay of U.S. workers rose in May to a 2.3% annual pace to match the fastest rate since 2010. Other tools to track wages also show a broad increase in worker pay.

If hourly wages continue to move higher, that would offer more evidence the labor market is getting tighter — a good thing for people looking for work. Companies normally don’t jack up wages until the supply of labor shrinks.

One reason wage growth may not explode is that some 17 million Americans who want a full-time job are still unable to find one. Not all of these people are counted in the official unemployment rate, so the labor market still has a fair amount of what economists call “slack.”

“We may continue to see rising wages, but not a rapid rate,” said Dan North, chief economist of credit insurer Euler Hermes. “The labor market is still five to 10 million jobs short of where it should be.”

High vs. low-pay jobs

The earlier phase of the U.S. recovery — 2010 to 2014 — was marked by rapid increases in lower-paying jobs in hotels, restaurants, retail stores and at temp agencies.