With 66,000 jobs lost—mostly in part-time roles—the weak labour market is piling pressure on the Bank of Canada to deliver a rate cut at its September 17 meeting.
Job losses spread across industries
Sectors once resilient are now showing cracks. Professional and technical services led the declines, while trade-sensitive industries like transportation, warehousing, and manufacturing posted steep job losses. In total, the economy has shed 38,500 jobs since the start of the trade war, including more than 58,000 manufacturing roles.
Economists now betting on a rate cut
CIBC’s Andrew Grantham noted the weakness is no longer confined to U.S. tariff-hit industries. Financial markets are pricing in a greater chance of a September rate cut, pushing bond yields lower. The Bank of Canada has held its key rate at 2.75% through three straight meetings, citing inflation risks. But with GDP down 1.6% in Q2 and only a slim rebound expected, the case for cutting rates is growing.
Inflation still in focus
Despite slowing growth, inflation remains sticky. July’s CPI rose 1.7%, while core measures averaged 2.4%. RBC economist Claire Fan stressed that August’s inflation report—set for release just a day before the Bank of Canada’s decision—could be the tipping point.
Regional pain points
Unemployment is hitting some communities hard. Alberta’s rate surged to 8.4%, B.C. climbed to 6.2%, while cities like Windsor (11.1%), Oshawa (9%), and Toronto (8.9%) remain among the hardest hit. Youth unemployment soared to 14.5%, with summer student joblessness at its worst since 2009.
USMCA uncertainty adds to the pressure
As Canada grapples with domestic weakness, the U.S. is preparing to reopen USMCA trade talks. With tariff tensions still fresh, the review process could bring more volatility to Canada’s economy, manufacturing, and export markets.
What this means for Canadians
For households, this environment creates both challenges and opportunities. If the Bank of Canada cuts rates, borrowing costs for mortgages, HELOCs, and refinancing could fall. But at the same time, job insecurity and slowing wage growth (down to 3.2%) highlight the importance of planning ahead.
At Lendworth Canada, we help borrowers and investors navigate changing markets with flexible mortgage solutions and stable, asset-backed investment opportunities. Whether you’re concerned about rising unemployment, rate cuts, or real estate trends, the key is to position yourself for both today’s risks and tomorrow’s opportunities.