CIBC Private Wealth
May 07, 2024
Money Financial literacy Economy Professionals Commentary NewsMorning Market Brief
After a hot start to 2024, the US labour market showed signs of moderating in April. The US labour market has been robust coming out of the pandemic, which has helped support consumer spending, a key component of the US economy. However, tight conditions have helped push wages higher, contributing to elevated inflationary pressures. A cool down could help moderate inflation and push the US Federal Reserve Board (Fed) to start cutting interest rates.
- Last Friday, the US Bureau of Labor Statistics announced the US economy added 175,000 jobs in April. This was down from the 315,000 job additions in March and was the lowest since October 2023. April’s additions came in below the 240,000 economists had expected, based on a survey from Bloomberg.
- Job additions in the health care sector drove April’s gains with 56,000. Notable additions were also posted in the retail trade and warehousing industries, which offset job cuts in the business services industry.
- The US unemployment rate edged higher to 3.9% in April from 3.8% in March. This matches the rate in February 2024, which was the highest since January 2022. The number of unemployed persons increased over the month.
- Canada’s labour market data for April will be released this Friday. Canada’s labour market has also shown signs of slowing in recent months. In March, the economy lost 2,200 jobs, which was the first month of job cuts since July 2023. At 6.1%, Canada’s unemployment rate is at its highest since 2021.
Friday’s announcement raised expectations that the Fed could cut rates twice in 2024, up from one cut expected before the announcement. The Bank of Canada (BoC) is also expected to cut rates this year, but it might begin a bit sooner. BoC governor Tiff Macklem recently said interest rates in Canada don’t need to be the same as that in the US or globally, but they should remain relatively close.
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