Synopsis:
CIBC reacts to March labour data from the US and Canada, noting solid pre-tariff strength in the US job market but a notably weaker Canadian labour print. While the Fed faces rising policy uncertainty amid tariff impacts, the BoC may have reason to continue easing as Canadian employment falters.
Key Points:
United States:
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Payrolls rose by 228K, well above consensus (140K), though offset by net 48K in downward revisions to prior months.
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Manufacturing jobs grew by only 1K, and motor vehicles employment was flat, hinting at early signs of tariff uncertainty.
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Federal job losses continued, with a 4K decline in March adding to 15K in losses over the last two months due to cost-cutting.
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Wage growth steady at 0.3% m/m; unemployment ticked up to 4.2%, with participation up slightly to 62.5%.
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Prime-age participation remains high, indicating underlying labour market health.
Canada:
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Employment fell by 33K, well below expectations of a 10K gain.
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Full-time jobs plunged by 62K, partially offset by part-time gains.
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Unemployment rate rose to 6.7%, cushioned only by a fall in participation.
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Wage growth for permanent workers slowed to 3.5% (from 4.0%).
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Mixed sectoral signals: manufacturing declined, but transport & warehousing rose—clouding the direct impact of US tariffs.
Policy Implications:
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For the Fed, this jobs report is now dated, given the April 2 tariff shock. The magnitude and persistence of tariffs—and their inflation/growth fallout—will complicate policy decisions.
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For the BoC, today’s Canadian data adds to the case for further cuts, though upcoming BoC surveys and market sentiment will guide timing.
Conclusion:
CIBC sees a healthy US job market pre-tariffs, but warns the real test lies ahead as growth slows and inflation accelerates due to new trade barriers. In Canada, labour market cracks are more visible, adding to dovish pressure on the BoC. For both central banks, policy paths are increasingly data- and sentiment-dependent amid a fast-changing macro landscape.
