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Japan's economic expansion in Q1 was weaker than initially estimated, as a sharp downward revision to corporate investment offset improvements in consumption and trade. Revised government figures showed real GDP grew at an annualized 1.8% pace in January-March, down from the preliminary estimate of 2.1%, while quarter-on-quarter growth was revised from 0.51% to 0.45%.

The key drag came from business spending. Capital investment was revised from a 0.3% gain to a -0.7% contraction, raising questions about corporate confidence amid a broader environment of rising inflation and expectations for further Bank of Japan policy normalization. The downgrade also reduced nominal GDP growth to an annualized 2.5% from the previously reported 3.4%.

However, the overall picture was not uniformly weak. Consumer spending was revised higher to 0.35% growth from 0.27%, suggesting household demand remained supportive. Housing investment was also stronger than first reported, while exports rose 1.8%, slightly above the preliminary estimate. Together, the revisions point to an economy still expanding at a healthy pace, though one increasingly reliant on consumers and external demand rather than corporate investment.

Canada's labor market delivered a much stronger-than-expected performance in May, with employment rising by 87.8k compared with expectations for a gain of just 10.2k. The increase marked the first significant monthly advance since November 2025 and followed a decline of -17.7k in April. While the result does not fully offset the weakness seen earlier this year, it represents a notable turnaround after cumulative job losses of -112k during the first four months of 2026.

The quality of hiring was particularly encouraging. Full-time employment surged by 154k, highlighting solid underlying labor demand rather than temporary or part-time hiring. As a result, the unemployment rate fell from 6.9% to 6.6%, beating expectations for an unchanged reading. The employment rate also improved by 0.2 percentage points to 60.7%, indicating broader labor-market participation and stronger workforce absorption.

Despite the sharp rebound in hiring, wage growth eased noticeably. Average hourly earnings increased 3.0% yoy in May, slowing from 4.5% yoy in April. That moderation should help alleviate concerns about wage-driven inflation pressures and may reduce any urgency for the Bank of Canada to consider tighter policy.

Full Canada employment release here.

US labor market resilience was on full display in May as non-farm payrolls rose 172k, nearly double market expectations of around 85k. The report was further strengthened by a sizable upward revision to April's payroll gain from 115k to 179k, indicating that hiring momentum was considerably firmer than previously thought.

The unemployment rate held steady at 4.3%, while the participation rate was unchanged at 61.8%, suggesting labor-market conditions remain broadly stable despite growing concerns about slowing economic growth.

Wage data were largely in line with expectations. Average hourly earnings rose 0.3% mom after 0.2% in April, while annual wage growth slowed from 3.6% yoy to 3.4% yoy.

The moderation in yearly wage growth may ease some concerns about a wage-price spiral, but the combination of strong hiring, stable unemployment, and still-solid wage gains is unlikely to alter the Fed's broadly hawkish stance.

*April revised from 115k to 179k

Full US NFP release here.