Weak Jobs Report Unlikely to Sway Financial institution of Canada in September, Economists Say
Ottawa, ON – August 13, 2025 – Canada’s labour market took successful in July, shedding 41,000 jobs, however economists extensively agree that the disappointing figures are unlikely to immediate the Financial institution of Canada (BoC) to chop rates of interest at its subsequent coverage assembly on September 17, 2025. The surprising job losses, which reversed almost half of June’s strong 83,000 job positive factors, have painted an image of a softening economic system, but inflation stays the central financial institution’s major focus, based on skilled analyses.
Statistics Canada’s July Labour Pressure Survey revealed a major downturn, with full-time employment dropping by 51,000 and part-time jobs rising marginally by 10,300. The unemployment charge held regular at 6.9%, slightly below the anticipated 7.0%, largely as a consequence of a 33,000-person decline in labour power participation. Youth aged 15–24 had been hit hardest, dropping 34,000 jobs, pushing their unemployment charge to 14.6%—the very best since 2010, excluding the pandemic interval. Key sectors like development (-22,000), info, tradition, and recreation (-29,000), and agriculture (-11,000) drove the losses, although transportation and warehousing noticed a notable achieve of 26,000 jobs.
Regardless of the weak report, economists argue that the BoC will seemingly preserve its coverage charge at 2.75%, citing the necessity for extra constant knowledge and a give attention to inflation developments. Michael Davenport, senior economist at Oxford Economics, famous, “There’s nonetheless over a month earlier than the Financial institution of Canada’s subsequent charge determination, and we don’t assume right now’s job numbers will do a lot to alter its pondering.” He pointed to elevated commerce coverage uncertainty and monetary stimulus as components supporting the BoC’s cautious stance. Equally, BMO’s chief economist Douglas Porter described the report as “unambiguously weak” however emphasised that June’s robust efficiency balances the general image, suggesting the economic system is operating with “some extra capability.” Porter added that inflation would want to sluggish considerably within the subsequent two shopper value index (CPI) stories for a September charge lower to achieve traction.
Scotiabank’s Derek Holt echoed this sentiment, calling the July losses a “summer time jobs report that masked underlying resilience.” He highlighted that the online job achieve for 2025 stays at 103,000, and wage progress accelerated to eight.1% month-over-month on a seasonally adjusted foundation—the strongest since October 2024. “Nothing hangs on simply this one report,” Holt stated, pointing to imminent inflation and GDP knowledge as extra important for the BoC’s decision-making.
Nonetheless, some economists see the weak report as rising the chances of a charge lower, although not essentially in September. Capital Economics’ Alexandra Brown famous, “The Labour Pressure Survey has as soon as once more made a mockery of the economist consensus,” arguing that the full-time, private-sector losses and declining participation charge bolster the case for a lower, supplied CPI knowledge doesn’t shock on the upside. CIBC’s Andrew Grantham additionally supported a possible 25-basis-point lower in September, stating, “At this time’s weaker-than-expected employment determine is however supportive for our name.”
Social media reactions on X replicate combined sentiment. Posts from @CdnMortgageNews and @FinSourceco famous the job losses as vital however underscored the BoC’s give attention to inflation, with market odds for a September lower rising barely from 33% to 37%. Conversely, @KarenFactsLover claimed Canada is “formally in recession” and predicted a charge lower, although this view lacks consensus amongst economists.
Market responses had been muted, with Canada’s 5-year bond yield dipping two foundation factors to 2.92% and the Canadian greenback briefly falling to 1.3754 in opposition to the U.S. greenback. The BoC will assessment extra knowledge, together with August’s jobs report, two CPI releases, and quarterly GDP figures, earlier than its September assembly. For now, economists like TD’s Leslie Preston argue that the report “seemingly gained’t transfer the needle a lot” on the BoC’s present stance, with inflation remaining the important thing driver.
Sources: Canadian Mortgage Tendencies, Scotiabank Economics, Morningstar, MoneySense, Statistics Canada, X posts