Canada: Gradual improvement outlook on labour market – RBC
Royal Bank of Canada (RBC) economist Claire Fan notes Canada’s labour market lost 42,000 jobs in August, partly reversing earlier gains and leaving modest year-to-date job growth. She emphasizes structural factors like demographics and weaker immigration as key drags.
Royal Bank of Canada (RBC) economist Claire Fan anticipates a gradual improvement in Canada's labour market despite recent job losses. She attributes the decline to structural factors such as aging demographics and reduced immigration. However, Fan points to improving unemployment and increased hours worked as positive signs. She anticipates solid domestic demand, which could support further labour market growth up to 2027.
While headline job growth is volatile, Fan emphasizes the importance of structural changes in shaping the labour market's trajectory. The unemployment rate is increasingly used as a gauge for cyclical conditions due to structural shifts. Fan also notes that U.S. tariffs are expected to have a targeted impact on Canada's labour market, with around 0.4% of jobs directly affected by the Section 338 tariff lists.
Near-term labour market impacts will be closely monitored, but Fan remains optimistic about domestic demand, as evidenced by Q2 GDP data, which will continue to drive labour market improvement into 2027.
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