U.S. jobs data had markets spooked today, with >170K job cuts announced this morning, the highest level since July of 2020. Notably, federal job cuts exceeded 60K, highlighting the impact of Musk’s DOGE initiative that we recently highlighted as a risk to American GDP growth.

While we can expect cuts to continue, especially at the federal level, it’s not all bad in the U.S. labour market, with jobless claims coming in at 221K, below expectations of 235K.

Jobs data tomorrow will provide more context

Tomorrow morning we should get more colour on the state of the labour market both north and south of the border, with payroll, unemployment, and participation rate data coming out before the bell.

In Canada, expectations are for the unemployment rate to inch back up to 6.7% from 6.6% in January, driven by a tight job market and uncertain economic backdrop.

The participation rate will be key to watch for any signs of downward migration, as elevated unemployment duration could start to discourage job seekers. Any negative developments on this front could have serious long-term growth implications.