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Not all doom and gloom The back-to-back GDP declines in April and May look slightly less concerning in light of June’s preliminary estimate showing a 0.1% m/m gain, suggesting the earlier weakness was partly a hangover from the export-led strength in the …
31st July 2025
Rates unchanged but slower growth beginning to raise concern The Bank of Canada kept interest rates unchanged at 2.75% for a third consecutive meeting today as it awaits greater clarity over the country’s future trading terms with the US. The …
30th July 2025
Drop in sales reflects end of tariff front-running rather than marked downturn The flash estimate showing a solid rise in retail sales in June, paired with the recent rebound in consumer confidence, suggests the decline in sales in May was more a …
24th July 2025
Underlying inflation too strong for July cut and September looking shaky too The above-target monthly gains in CPI-trim and CPI-median in June leave the three-month annualised pace of those averaged measures holding uncomfortably high at 3.5%, meaning the …
15th July 2025
Strong across the board The strong 83,100 rise in employment and the dip in the unemployment rate in June suggests the labour market is in better shape than we had feared, despite ongoing uncertainty around Canada’s trade relationship with the US. While …
11th July 2025
Exports weaker than they look While the headline export number for May shows significant improvement from a grim April, this was mostly driven by volatile gold exports, where non-mineral product exports declined in the month. Exports to the US continued …
3rd July 2025
Manufacturing slump points to weak second quarter The worse-than-expected 0.1% m/m contraction in GDP in April and equivalent sized estimated fall in May suggests that growth was flat at best in the second quarter, with a clear risk of a contraction. This …
27th June 2025
Core inflation easing, but probably still too high for imminent rate cuts The Bank’s preferred CPI-trim and CPI-median core measures rose by a smaller 0.21% m/m on average in May, with the three-month annualised rate declining to 3.0%, but that is …
24th June 2025
Consumers remain resilient to tariffs for now The rise in retail sales in April showed consumer spending remained resilient to tariffs at the start of the second quarter. That said, the grisly flash estimate for May suggests the economy will slow over the …
20th June 2025
Add manufacturing to list of weak areas in the economy Manufacturing sales volumes plunged in April as the temporary boost to exports from tariff front-running unwound. Prospects for a meaningful rebound over the coming months look slim, with new orders …
13th June 2025
Labour market continuing to struggle The rise in employment in May was better than expected but, paired with recent data, still shows that the labour market is struggling. We are therefore sticking to our view that the Bank of Canada will cut interest …
6th June 2025
Reversal of tariff front-running sends deficit to record high The jump in the trade deficit to a record high in April was larger than expected as tariff front-running reversed with “Liberation Day” and Canadian exporters paused to make more of their …
5th June 2025
Rate cuts delayed, but still coming The Bank of Canada avoided surprising markets by keeping interest rates unchanged at 2.75% today, as it continues to wait to see what the full impact of uncertain US trade policy on the economy will be. The accompanying …
4th June 2025
Fall in domestic demand could still persuade the Bank to cut Despite the upside surprise to first-quarter GDP growth, the contraction in domestic demand means we are sticking to our view that the Bank of Canada will cut interest rates again next week. The …
30th May 2025
Tariff front-running supports retail sales The jump in motor vehicle sales in March suggests that tariff front-running has supported consumption, although the big picture is that retail sales were strong in most of the key sectors. Likewise, the …
23rd May 2025
Sharp drop in headline rate masks hot underlying inflation The removal of the carbon tax sent energy prices tumbling in April, pushing headline inflation below the 2% target. More concerningly, the Bank’s preferred CPI-trim and CPI-median core measures …
20th May 2025
Sharp drop in manufacturing sales volumes The sharp decline in manufacturing sales volumes in March suggests the earlier boost from US tariff front-running is now reversing. A modest rise in new orders supports our view that the watered-down tariffs that …
15th May 2025
Tariffs weigh hard on manufacturing employment Employment would have fallen again in April were it not for the boost from the federal election, which supports our view that the Bank of Canada will resume its loosening cycle next month and ultimately cut …
9th May 2025
Tariffs bite, but strong demand elsewhere softens the blow The surprise improvement in Canada’s goods trade balance in March, despite the imposition of US tariffs, was thanks to a surge in exports to other countries. Nonetheless, as the survey indicators …
6th May 2025
Bad but not awful Although the 0.2% m/m contraction in GDP in February was worse than expected, the preliminary estimate of a partial rebound in March should soothe fears that the economy is rapidly falling into recession. We expect GDP growth to slow …
30th April 2025
Slump in sentiment not yet weighing heavily on spending The moderate decline in retail sales volumes in February was probably due to the unseasonably severe winter weather rather than the recent slump in sentiment, with the latest flash estimate implying …
25th April 2025
Bank holds but further cuts likely amid dovish communications The Bank of Canada’s decision to keep interest rates unchanged at 2.75% today was not a huge surprise given recent above-target gains in core prices, concerns about future price increases and …
16th April 2025
Gasoline-driven fall in headline inflation The downward surprise to CPI inflation in March, along with the first target-consistent gains in CPI-trim and CPI-median in eight months, at the margin raise the odds of a rate cut by the Bank of Canada tomorrow. …
15th April 2025
Tariffs not entirely to blame for employment fall While US tariffs will be the obvious culprit for the fall in employment in March, two-thirds of the decline was concentrated in the services sector, suggesting that other factors were at play. Nonetheless, …
4th April 2025
Tariffs knock trade balance back into deficit The large fall in exports in February was to be expected given the (albeit temporary) imposition of tariffs on goods imports into the US that month. While Canada may have gotten off relatively lightly on …
3rd April 2025
Solid rise in GDP not a sign of things to come The stronger-than-expected 0.4% m/m rise in GDP in January, along with an upward revision to the December outturn, shows the economy still had solid momentum at the start of this year. The weak February …
28th March 2025
Consumption outlook deteriorating The sharp drop in retail sales volumes in January is not a major concern, coming off a massive GST holiday-driven surge the month before. The worry is that it could signal what's to come, with the preliminary estimate …
21st March 2025
Upside surprise makes the Bank of Canada’s job even harder The large upside surprise to CPI inflation in February, together with another set of above-target consistent gains in CPI-trim and CPI-median, reduces the chance of the Bank of Canada cutting …
18th March 2025
Strong start to the year not a sign of things to come The large rises in both manufacturing and wholesale sales volumes at the start of the year suggest that GDP may have done even better than the flash estimate of a 0.3% m/m rise in January, although …
14th March 2025
Bank cuts again but warns that it must protect against tariff-induced inflation Although the Bank of Canada cut interest rates by 25bp again today, it also warned that “monetary policy cannot offset the impacts of a trade war” and that it must guard …
12th March 2025
Weather rather than tariffs to blame for weak hiring The essentially unchanged level of employment in February was probably mostly due to the unseasonably severe winter weather during the survey reference week rather than the threat of US tariffs. …
7th March 2025
Exports to the US reach a record high amid tariffs The huge increase in exports in January was in line with the timely advance US data released last week and implies US importers looked to front-run tariffs ahead of Donald Trump’s return to the Oval …
6th March 2025
President Donald Trump's decision to grant a one-month exemption to the Big Three Automakers (Ford, GM & Stellantis) is something of a disappointment given the earlier heavy hints from his Commerce Secretary Howard Lutnick that more widespread relief was …
5th March 2025
This page has been updated with additional analysis since first publication. Revisions leave economy in a much better place The 2.6% annualised gain in GDP last quarter was much stronger than the Bank of Canada’s forecast for a 1.8% increase and was …
28th February 2025
GST holiday temporarily boosts sales The jump in retail sales in December was partly due to the GST holiday, but also reflected strong gains in sectors that were unaffected by tax changes. Nonetheless, with sales dropping back in January, this release …
21st February 2025
Underlying inflation pressures too strong beneath the surface The GST holiday meant that headline inflation remained below the 2% target in January, but there is clear evidence that underlying inflation pressures are building. Given the tariff threat …
18th February 2025
Manufacturing recovery falls flat The sharp decline in manufacturing sales volumes in December suggests that the earlier recovery in the sector has hit a wall. New orders rose only modestly, by 1.3%, confounding hopes that the sector might benefit from …
14th February 2025
Due to an error in the figures mentioned in the original, we are re-sending this Canada Economics rapid response. We apologise for any inconvenience caused. Strong across the board A further strong rise in employment and tick down in the unemployment rate …
7th February 2025
Strong end to 2024 but little reason for optimism in 2025 The surge in exports in December and recent improvement in the export order survey indicators add to the evidence that the economy was picking up momentum at the end of last year. The prospect of …
5th February 2025
Still struggling for momentum ahead of potential tariff hit The larger-than-expected decline in GDP in November and flash estimate of only a moderate rebound in December suggest that growth was 1.6% annualised last quarter, a little lower than we and the …
31st January 2025
Bank cuts by 25bp as 25% tariff threat hangs over the economy With the economy doing better recently, the Bank of Canada’s decision to cut by 25bp today might have been a much closer call were it not for the looming threat of US tariffs. Any tariffs could …
29th January 2025
Heading for another strong quarter On the surface, the 0.4% decline in retail sales volumes in November looks worrying, but that fall partly reflects households delaying purchases ahead of the December GST holiday. Encouragingly, November’s drop appears …
23rd January 2025
Concerning signs despite GST-related fall in headline inflation The small fall in headline inflation to 1.8% in December is not as encouraging as it looks, with the details suggesting that a higher proportion of the GST holiday was captured by the price …
21st January 2025
Manufacturing recovery stalls The rise in manufacturing sales in November was entirely due to higher prices, with sales volumes unchanged. While the recovery in activity took a breather, the 1.8% m/m rise in new orders and increase in the S&P Global …
15th January 2025
This page has been updated with additional analysis since first publication. Jump in employment raises chance of Bank pause The huge gain in employment in December supports our view that labour market conditions are strengthening, despite the recent …
10th January 2025
Export volumes continue to recover The third consecutive rise in export volumes in November provides further evidence that the economy was gaining momentum at the end of last year. US tariffs could cause the recovery to go into reverse this year, but that …
7th January 2025
Green shoots emerging The stronger-than-expected increase in GDP in October and upward revisions to the prior two months leaves fourth-quarter growth on track to accelerate to 2% annualised, raising the chance of the Bank of Canada pausing at its next …
23rd December 2024
Consumption losing momentum again Retail sales volumes were unchanged in October, bringing a run of strong consecutive monthly gains to an end. Moreover, the preliminary estimate that sales values were unchanged in November too suggests this may be the …
20th December 2024
Underlying inflation pressures building despite downside headline surprise The surprise fall in headline inflation back below the 2.0% target in November reflected steep price falls in a handful of components related to consumer goods, driven by Black …
17th December 2024
GDP growth picking up again The upside surprises to both manufacturing and wholesale sales in October supports our view that the near-term economic outlook is now better than the Bank of Canada seems to think. It looks likely that the preliminary estimate …
13th December 2024
