Canada’s economy lost jobs in back-to-back months for the first time since 2021, pushing the odds of an interest rate cut in September significantly higher.
What’s even more troubling: weakness in the labour market started spilling over into the service sector, which is typically less sensitive to trade policies than the goods sector.
A reaction from the Bank of Canada is widely expected later this month, as an interest rate cut could help inject much-needed confidence into the market.
The Canadian economy remains under heavy pressure as the trade dispute with the U.S. continues. At the same time, the U.S. is also experiencing weak job growth tied to its trade policies.
This development aligns with RSM’s earlier prediction that trade conflicts tend to be a lose-lose game, whether it’s between Canada and the U.S. or any country in the deeply interconnected global economy.
Still, we expect trade-related pressures to ease in the coming months as clarity around tariffs improves. Even if tariffs remain in place, giving businesses a clear framework is the top priority to keep the market on track.
Read RSM Canada’s latest analysis in The Real Economy Canada and subscribe for more updates.
