Synopsis:

The US January jobs report showed softer payroll gains but strong revisions and robust wage growth, supporting the Fed’s cautious stance. Meanwhile, Canada’s job market remained hot, but trade uncertainty casts doubt on sustainability.

US Jobs Report: Solid Overall, Despite Lower Headline Payrolls

1. Payrolls Below Consensus, But Prior Revisions Were Strong

   • 143K jobs added (vs. 175K expected), but December revised up to 307K.
   • +100K net revisions over the prior two months.
   • 3-month job gains revised up from 170K to 204K.

2. Wage Growth Surprised to the Upside

   • +0.5% m/m (above consensus), but may reflect lower hours worked (34.1 vs. 34.2).

3. Household Survey Looked Strong

   • Unemployment rate fell to 4.0% (vs. 4.1% expected).
   • Participation rate ticked up to 62.6%, signaling continued labor supply growth.

4. Takeaway:

   • Fed remains on hold, as momentum in labor markets remains solid.
   • Focus remains on inflation, fiscal, immigration, and trade policies.

Canada Jobs Report: Strong Gains, But Risks Ahead

1. Employment Growth Surged

   • +76K jobs added (vs. 25K expected).
   • Unemployment fell to 6.6% (from 6.7%), even with rising participation.

2. Private-Sector & Manufacturing Hiring Boosted Gains

   • Manufacturing added 33K jobs, but tariff uncertainty threatens future gains.

3. Wage Growth & Hours Worked Still Strong

   • Wage growth eased to 3.7% (from 3.8%).
   • Hours worked surged 0.9%, indicating strong labor demand.

4. Takeaway:

   • The unemployment rate is still higher than late 2022, suggesting slack remains.
   • Trade uncertainty & tariffs could weigh on hiring decisions moving forward.
   • Lower rates still needed to support a full labor market recovery.

Conclusion:

The US job market remains solid, despite softer headline payrolls, while Canada’s strong hiring faces risks from trade uncertainty. The Fed stays on hold, while Canada may need further rate cuts to absorb labor market slack.