📝Labour Market Slowdown Not Enough, See 25Bps Hike In May: CIBC

The household survey, which is more volatile and less reliable on a month-to-month basis, showed a 577K increase in jobs. That left the unemployment rate a tick lower, while there was an increase in the participation rate. The prime-age (25-54 years) participation rate remained steady at its pre-pandemic peak level. It's possible that as excess savings continue to dwindle ahead, labor force participation in that group continues to climb. The increase in participation over the first quarter helped to alleviate labor shortages, and put downwards pressure on wage growth, a positive sign for the Fed.

This report adds to a plethora of data that suggest that the labor market is cooling, in line with the upward revision to initial jobless claims, the drop in job openings, and the ISM services index decline. However, the slowdown isn't pronounced enough to make a sustainable return to on-target inflation attainable, and the Fed is therefore poised to hike rates by a final 25bps in May. - CIBC