The June jobs report could offer crucial clues about where the economy is headed and what the Fed will do next

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• The June jobs report is set to be released Friday at 8:30 a.m. ET.
• It's expected to show that hiring rebounded last month after a surprisingly weak reading in May.
• An unexpected slowdown would add to concerns that the labor market is running out of steam.
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In the latest snapshot of the US economy, government data out on Friday is expected to show that hiring rebounded in June and that wage growth accelerated at a solid pace.

Economists forecast that the Labor Department will say the US added 164,000 nonfarm payrolls last month, which would mark a healthy recovery from a surprisingly weak reading of 75,0000 jobs in May. The unemployment rate is expected to hold at 3.6%, its lowest level in nearly five decades, according to estimates compiled by Reuters.

Wages are expected to accelerate 0.3% from a month earlier, marking a slightly slower pace than the previous month but a year-over-year gain above 3%.

The results could offer crucial clues about the state of the expansion, which became the longest on record last week. Economists say a rebound in June would suggest that the weak reading last month was more of a fluke than the start of a downward trend, even as President Donald Trump remains locked in a tariff dispute with the second largest economy.

"The impact of the end of the tax cuts has been magnified in recent months by the hit from the Q4 drop in stocks," said Ian Shepherdson, the chief economist at Pantheon Macroeconomics. "But with the market now at new highs and a trade deal with China back on the agenda, we expect job growth to pick up again in later summer or early fall, heading back to the high 100s."

But after 104 months of job gains, another disappointing reading could suggest that the labor market is running out of steam. The Federal Reserve has signaled it could slash interest rates at a policy meeting this month, if key sectors weaken and trade tensions worsen.

"If the June employment data falls below consensus for a second month in a row, however, this would put additional pressure on the Fed, making a September rate cut more likely," said Cailin Birch, the global economist at The Economist Intelligence Unit.