US Pulse: Hiring Rose in a Structurally Weak Labour Market

The US labor market is showing structural weakness through labor force contraction and slowing wage growth (2.8% saar), despite a 115k gain in nonfarm payrolls. Markets await April CPI data, which is expected to show headline inflation rising on energy costs while core remains muted.

Key Takeaways

• 1.The US labour market remains structurally weak, evidenced by a 1.5m contraction in the labour force and a falling participation rate (61.8%) in early 2026.
• 2.Wage growth is slowing (2.8% saar), which, coupled with strong productivity, suggests the labour market is currently a drag on inflation rather than a driver.
• 3.April CPI is expected to show a divergence between rising headline inflation (energy-driven) and muted core inflation.

Table of Contents

• Inflation and labour market
• The week ahead
• The week that was
• What we're watching
• Labour force contraction and slowing wage growth
• April CPI inflation
• Data pulse: the week ahead
• Data pulse: the week that was
• Important Notice

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