Job growth in the U.S. likely slowed down in June, after a surprising jump the previous month.

The monthly employment report to be released Friday by the Bureau of Labor Statistics is expected to show that employers added 200,000 jobs last month and that the unemployment rate held steady at 4%, according to economists surveyed by the Wall Street Journal and Dow Jones Newswires. That’s less than the 272,000 jobs added in May. 

“Big Data measures continue to indicate a below-normal pace of job creation during the spring hiring season, and our layoff tracker is also edging higher from low levels,” Goldman Sachs economists said in a recent research note.

The jobs numbers will be watched closely by officials at the Federal Reserve, who have kept interest rates at a 23-year high for almost a year as part of an effort to contain inflation. Weakness in the labor market could prompt the central bank to consider cutting its benchmark rate, which would be welcome news for consumers and investors alike.

Job Growth Concentrated in a Few Sectors

Economists at Wells Fargo said they will be looking to see if job growth remains concentrated in a few sectors—particularly health care, government, and leisure and hospitality. While those industries account for 36% of all jobs, they make up 66% of the job growth since last June, the economists found. These sectors have rebounded after COVID-19-related job losses and haven’t been as strongly affected by high interest rates.

“We expect these three categories to continue to provide a sizable lift to the monthly rate of payroll gains that surpasses their pre-pandemic contribution and helps keep payroll gains afloat despite the current weight of monetary policy,” wrote Wells Fargo economists Sarah House and Aubrey George.

However, those categories are expected to provide less lift to the economy than in previous months. Wells Fargo economists expect job growth to slow over the next 12 months, dropping down to a pace of about 150,000 jobs a month. 

Fed Keeping Eye on Labor Markets

While the labor market has remained solid, San Francisco Federal Reserve President Mary C. Daly said in remarks last week that the longer interest rates stay elevated at decades-high levels, the bigger impact they could have on unemployment, potentially forcing the Fed to move more quickly on rate cuts. 

“So far, the labor market has adjusted slowly, and the unemployment rate has only edged up. But we are getting nearer to a point where that benign outcome could be less likely,” Daly said.