With June jobs report looming, DOGE government layoffs could start becoming a factor

While the impact from the DOGE layoffs has been fairly muted so far in relation to total job growth, recent trends show that's to change

The BLS releases the June nonfarm payrolls count Thursday

Brandon Bell | Getty ImagesFor federal government workers who worked at agencies tied to this year's job cuts, an apparent slowdown in the labor market is happening at the worst possible time

A gradual pullback in hiring and job openings has come at the same time that hundreds of thousands of federal workers are out looking for employment, the casualty of layoffs by Elon Musk's Department of Government Efficiency

Although economists almost universally downplay it, one straw in the wind may have come Wednesday, when payrolls cessor ADP said private sector hiring in June unexpectedly contracted by 33,000 jobs, far lower than economists' estimate of 100,000

And while the impact from the DOGE layoffs has been fairly muted so far in relation to total job growth, recent trends show that's to change, according to data from the Indeed Hiring Lab

Weak white collar demand"There are still a lot of questions how that's all going to trickle into the labor market

A lot of people are out there looking for work from the federal government," Indeed senior economist Cory Stahle said. "The big question is whether or not they're going to be able to find them given the weaker demand for the higher education, white-collar jobs now. "From January through April of this year, the number of job openings fell by 5% while the hiring rate has hovered around levels last seen in 2014, according to Bureau of Labor Statistics data

At the same time, Indeed said it has seen applications from workers at federal agencies soar by 150%, a trend that has been particularly acute at knowledge-work jobs such as data analytics, marketing and software development

While May vided some hope, with applications dipping by 4%, there are still signs that the DOGE efforts are having an impact on the broader labor picture. "Demand coming from employers has really pulled back a lot more for these white-collar jobs than it has for many of other kind of in-person skilled labor roles," Stahle said. "So that's a real big challenge for anybody entering the labor market right now. "Slowdown in payrollsThe DOGE factor is a significant consideration as policymakers look for cracks in what had been a strong, and virtually uninterrupted, expansion in the labor market since the Covid pandemic

An on conditions comes Thursday when the BLS releases the June nonfarm payrolls count

The unemployment rate is expected to edge higher to 4

The efforts this year by DOGE to pare the federal workforce have resulted in more than 280,000 positions cut, according to Challenger, Gray & Christmas

To be sure, it's difficult to gauge what the exact impact on the headline jobs numbers will be, given that many of the displaced workers have found other employment and some of the initial layoffs have been reversed

Also, job openings at the federal level are virtually unchanged this year, though that doesn't necessarily mean the vacancies will be filled

However, Stahle said the efforts by the Trump administration to reduce head count are not the only obstacles facing job seekers

He also noted that jobs are harder to come by as the Federal Reserve keeps its interest rate benchmark elevated, even in the face of persistent calls from President Donald Trump to ease monetary policy

Higher rates discourage debt-dependent companies from borrowing and thus expanding, keeping hiring in check, Stahle said. "A lot of the startups and other companies rely on borrowing to grow and hire, and if the cost of borrowing goes up, it can naturally restrict things," Stahle said. "They went on a hiring spree [after the Covid pandemic]

They brought in a lot of people and haven't necessarily needed to hire as a result.