Not that long ago, U.S. payroll growth of less than 100,000 or so a month meant the labor market was sinking and signaling a potential recession. No more, though, as that kind of number is pretty much all that is needed to keep unemployment steady and the Federal Reserve at bay.

When the Bureau of Labor Statistics releases its job count for April on Friday morning at 8:30 a.m. ET, it’s expected to show a gain of just 55,000 — anemic compared with what the economy has seen in recent years, but enough to keep the jobless rate at a relatively low 4.3%.

The picture in total is one of a labor market that, while undoubtedly cooling, is generally stable and resilient despite a number of challenges.

“The headline message remains similar to previous employment reports, if anything, accentuated though,” said David Tinsley, senior economist at the Bank of America Institute. “The labor market momentum in terms of payrolls has really turned solid.”

The degree of stability, though, is in relative terms.

Against muted expectations, job gains totaled 178,000 in March, the best month since December 2024. But that still left the 12-month average at just 22,000. Excluding healthcare, the economy has seen a net loss of jobs.

Gains flow to the top

Understanding the current labor market requires looking beyond the headline numbers, said Tinsley, who referenced the popular K shape used to describe current economic conditions where benefits of prosperity are weighted toward top earners.

“It’s a really interesting set of kind of divergences across the economy. The overall picture seems to us quite solid, both in terms of wages and payrolls, but lots of Ks,” he said. “There’s lots of divergence in this economy right now, even though the headline looks solid.”

One area he cites particularly is wage growth.

Average hourly earnings are projected to have risen 3.8% annually in April, though that doesn’t tell the story of where the gains are flowing.

Bank of America’s deep well of data shows that in April, the top one-third of earners saw 6% after-tax wage gains while the bottom group showed a gain of 1.5%. That’s a particularly painful statistic considering that the consumer price index rose 3.5% through March, indicating that low earners saw a net loss of income.

“Just beneath the surface, distributions matter a lot here,” Tinsley said.

The economist further pointed out that hiring disparities are popping up regarding business size, with small businesses seeing declines over the past three months.

The Fed’s reaction

The crosscurrents are presenting challenges to Fed policymakers who have grown increasingly split over the direction of interest rate policy.

Earlier this week, New York Fed President John Williams noted the “conflicting signs” between data such as weekly jobless claims showing stability even as consumer sentiment surveys point to a softening picture.

“Much of the hard data points to stabilization, while some of the soft data suggest continued gradual slowing,” Williams said.

“Together, these indicators suggest increasing labor market slack,” Williams added, using a term synonymous with a softening labor market. “Although this dissonance in the hard and soft data may reflect the effects of a low-hire, low-fire labor market, it bears continued close monitoring for signs that conditions are shifting.”

Investors are betting that the labor market’s relative stability, combined with elevated inflation, will keep the Fed on hold through the year. Williams repeated his position that he sees monetary policy as “well-positioned” for the current climate.

The European Union is considering rules that would restrict its member governments’ use of U.S. cloud providers to handle sensitive data, sources familiar with the talks told CNBC.

The European Commission — the EU’s executive branch — is expected to present its “Tech Sovereignty Package” on May 27, which will include a range of measures aimed at bolstering the bloc’s strategic autonomy in key digital areas.

As part of preparations for that package, discussions are taking place within the Commission around limiting the exposure of sensitive public-sector data to cloud platforms provided by companies outside of the EU, two Commission officials, who asked to remain anonymous as they weren’t authorized to discuss private talks, told CNBC.

As tensions with U.S. President Donald Trump’s administration have intensified, there have been calls for Europe to diversify away from U.S. cloud providers, which currently dominate the European market, and towards homegrown providers for its most critical workloads.

“The core idea is defining sectors that have to be hosted on European cloud capacity,” one of the officials said. They added that companies providing cloud solutions from third countries, including the U.S., could be impacted.

Proposals would not prohibit overseas companies’ cloud platforms from government contracts entirely, but limit their use in processing sensitive data at public sector organizations, depending on the level of sensitivity, they added. The officials said that talks are ongoing and yet to be finalized.

“U.S. cloud providers could face restrictions in certain sensitive and strategic sectors” within EU member states’ public bodies as a result of the proposals, one official said.

The officials told CNBC there are discussions around proposing that financial, judicial and health data processed by governments and public-sector organizations require high levels of sovereign cloud infrastructure.

The discussions do not relate to private-sector companies and the “Tech Sovereignty Package” would not propose rules about their use of cloud platforms, one of the officials said.

Once presented by the Commission, the package would need to be greenlit by all 27 member states. The “Tech Sovereignty Package” will include the Cloud and AI Development Act (CADA) and the Chips Act 2.0, bills aimed at encouraging sovereign, homegrown solutions and products in both of those areas.

When asked for comment, a Commission spokesperson told CNBC the package was “about Europe waking up and getting its act together.”

They added that it would “improve opportunities for sovereign cloud offerings, including through public procurement, and support the entry into the market of a more diverse set of cloud and AI service providers.”

EU member states’ public sector organizations can currently use cloud platforms provided by overseas companies — often U.S.-based due to the country’s dominance in the sector — to process highly sensitive data, including health and financial data, provided they comply with regulations.

But scrutiny on that reliance has grown as transatlantic relations have soured in recent months. Under the 2018 Cloud Act, U.S. law enforcement can request user data from American companies, regardless of where the data is stored.

European governments told CNBC in February they were exploring homegrown and open-source alternatives to U.S. tech platforms and upping budgets for digital sovereignty.

France announced it would roll out Visio in January — a video conferencing tool developed by the government — which it said would be available to all state services by 2027, in place of U.S. tools like Microsoft Teams and Zoom.

The same month, the EU said it faced a “significant problem of dependence on non-EU countries in the digital sphere…potentially creating vulnerabilities, including in critical sectors.”

In April, the Commission awarded a 180 million euro tender to four European sovereign cloud projects to supply EU institutions and agencies, with one of those involving a partnership with a joint venture between French aerospace company Thales and Google Cloud.