Synopsis:

CIBC views the April US employment data as a sign of ongoing labor market strength, with job gains exceeding expectations despite early signs of trade-related sector weakness. Wage growth softened, giving the Fed room to pause, but tariff impacts may accumulate over time.

Key Points:

• Headline Job Gains Beat Expectations:

  • 177K new jobs added vs. 138K expected.

  • Three-month average now at 155K, still solid though trending lower.

• Revisions & Sectoral Weakness:

  • Net negative revisions of 58K to prior two months.

  • Manufacturing down by 1K; motor vehicle manufacturing shed 5K jobs—early trade policy impact.

  • Federal government jobs fell by 9K, but offset by gains in state and local hiring.

• Wage Growth Softens:

  • Average hourly earnings rose 0.2% m/m, below consensus, helping moderate inflation risks.

  • Unemployment rate steady at 4.2%; participation rate edged up to 62.6%.

• Tariff Effects to Emerge Gradually:

  • Many firms are still in cost-cutting and wait-and-see mode.

  • The broader economic drag from tariffs may take time to materialize, especially outside affected sectors.

Conclusion:

CIBC interprets the report as supportive of a patient Fed, with no urgency to cut or hike. Labor market strength is holding up for now, but early signs of sectoral damage from trade tensions are emerging, especially in manufacturing. Future payroll data will be key to determining how deep and widespread those effects become.