NEWS AND INSIGHTS | INSIGHTS

CIO Notebook: April Payrolls Project Stabilization Ahead of Warsh Confirmation

5月 11, 2026
Shannon Saccocia, CFA, Chief Investment Officer—Wealth

We expect the Fed to maintain a wait-and-see approach given elevated energy prices, with summer rate cuts unlikely absent clear evidence of prolonged de-escalation in energy supply disruptions and a sharp deterioration in the labor market.

April non-farm payrolls, released today, were stronger than anticipated for the second straight month. Payrolls increased by +115k ahead of expectations for a +75k print. Revisions too were modest, with February payrolls revised lower by -23k while March was revised higher by +7k.

Contributing to April’s strong reading were a number of sectors. While health care and social assistance hiring (+37k and +17k, respectively) continued to drive monthly job gains, the surge in hiring in more cyclical sectors perhaps portends an inflection point in terms of the overall U.S. economy. Transport and warehousing payrolls increased by +30k, corroborating recent evidence of industrial sector acceleration as reflected in stronger PMI and Fed manufacturing surveys. Retail trade (+22k), leisure and hospitality (+14k), and construction (+9k) were all up as well in the month. The manufacturing sector, however, continued to shed jobs (-2k). Worth noting is the continued trend lower in federal government and information hiring. Federal employment fell by -9k, bringing the cumulative decline to -348k from the October 2024 peak. The information sector, representing the front edge of what will likely be continued employment efficiencies generated by AI, fell by -13k; jobs in this sector are -342k lower than its zenith in November 2022.

The unemployment rate was steady at 4.3%, supported by a lower participation rate, which fell once again to 61.8% from 61.9%. In addition, the underemployment rate (U6), which measures unemployed, discouraged and workers who are part-time for economic reasons, rose to 8.2%. Employed persons were lower by -226k and there were +134k more unemployed persons. More constructive – and certainly beneficial against the backdrop of higher energy prices – was the continued strength in average hourly earnings, up +0.2% month-over-month and +3.6% year-over-year, while average hours worked ticked up to 34.3 from 34.2.

The print likely does little to change the views of a Fed which tilted a bit more hawkish in last week’s meeting; with energy prices still elevated, a wait-and-see approach is our current expectation. Absent a sharp deterioration in the U.S. labor market, it is difficult to envision a scenario in which the Fed cuts interest rates until there is clear evidence of a prolonged de-escalation and commensurate ease in energy supply disruption. In addition, while one could expect consumers to become more discerning and thoughtful against a backdrop of lower discretionary income levels, pockets of softness have not translated to a meaningful deceleration in consumer activity which could translate to recession fears. Next Tuesday’s CPI release will provide further context for the path of the Fed over the coming months, and we will be watching closely for indications of higher energy prices transmitting to the broader economy in that release.

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