Synopsis:
CIBC sees US job growth remaining resilient in February despite trade policy concerns, though federal job cuts and hiring slowdowns may weigh on future payrolls. Meanwhile, Canada’s job market stalled, with just a 1k employment gain, reflecting potential early impacts from tariff uncertainty. The Bank of Canada is expected to respond with a rate cut next week.

Key Points:

US Jobs Report 🇺🇸

1️⃣ Payrolls Rose by 151K, Slightly Below Consensus 📊

• February payrolls came in below the 160K expected but above January’s 125K.
• Manufacturing employment surprised to the upside, adding 10K jobs.

2️⃣ Federal Job Cuts Begin to Show 📉

• The government shed 10K jobs in February due to cost-cutting measures.
• An additional 75K federal workers resigned but have not yet fully impacted payrolls.

3️⃣ Unemployment Rate Ticked Up to 4.1% 📈

• Household survey data was weaker, with participation falling to 62.4%.
• Wage growth was stable at 0.3% MoM, in line with expectations.

4️⃣ Fed to Remain on Hold Despite Economic Uncertainty 🏦

• Trade-exposed sectors may slow hiring in the coming months.
• With inflation sticky and the economy near full employment, the Fed is expected to prioritize price stability.

Canada Jobs Report 🇨🇦

1️⃣ Hiring Stalled, Adding Just 1K Jobs 📉

• Well below the 20K consensus expectation.
• The unemployment rate held at 6.6%, but only due to lower labor force participation.

2️⃣ Tariff-Exposed Sectors Showing Weakness 🚨

• Manufacturing and transportation saw job declines, reflecting trade uncertainty.
• Retail hiring was a bright spot, but overall employment gains were muted.

3️⃣ Hours Worked Fell Due to Winter Storms ❄️

• A 1.3% MoM decline in hours worked, partly due to severe weather.
• Hourly earnings for permanent employees rose to 4.0%, but this may have been distorted by the drop in hours.

4️⃣ BoC Rate Cut Expected Next Week 📉

• Weak hiring and tariff uncertainty reinforce expectations for a 25bp rate cut.
• The BoC is likely to ease policy to cushion against further economic headwinds.

Conclusion:

CIBC sees the US labor market holding up for now but warns of potential weakness ahead as federal job cuts and trade uncertainty take a toll. In Canada, hiring stalled in February, with early signs of trade-related pressures. With downside risks mounting, the Bank of Canada is expected to cut rates next week.