|

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. Despite this, she highlights improving unemployment, stronger hours worked, and expects solid domestic demand to support further labour market improvement into 2027.

Structural drags but improving indicators

"Headline job growth is notoriously volatile, and we continue to continue to point to structural changes, including rising retirement from aging demographics and slowing population growth from weak immigration as bigger drivers behind dismal job growth in Canada this year."

"As employment is impacted by those structural changes, we have been relying more on the unemployment rate as a better gauge of cyclical conditions."

"In August, the unemployment rate held onto improvements in the prior months."

"This is in line with our own analysis, that continues to expect U.S. tariffs will have pronounced, but targeted effect on Canada’s labour market –we estimated 0.4% of jobs are directly involved in producing the goods that are on the new Section 338 tariff lists."

"Near-term labour market impacts will be watched closely but we continue to expect solid domestic demand, as was seen in GDP data in Q2 will support further labour market improvement into 2027."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

AUD/USD holds losses on unchanged PBOC rates

The Australian Dollar registers two days of consecutive gains versus the US Dollar, trading at 0.6980, up more than 0.50% as risk appetite improved, while the Aussie was supported by strong data on China’s GDP and Retail Sales.

USD/JPY: Japanese Yen flatlines near 158.50 as markets seek direction

The USD/JPY pair steadies around 158.50 during the Asian trading hours on Tuesday. Traders prefer to wait on the sidelines ahead of Japan’s National Consumer Price Index inflation data later on Friday. Meanwhile, elevated US bond yields provide some support to the US Dollar against the Japanese Yen.

Gold tumbles below $4,150 amid elevated US Treasury yields

Gold price falls to around $4,135 during the early Asian session on Tuesday. The precious metal extends its downside as US bond yields stayed elevated despite falling energy prices. Traders continue to assess the outlook for US interest rates ahead of next week’s Federal Reserve policy meeting.

Bitcoin profit-taking cools as spot demand stays weak, Glassnode says
Glassnode says Bitcoin (BTC) selling pressure has eased but spot demand stays weak near $82,000. Supply in profit fell to 68.2% as options expiry looms. Blockchain analytics firm Glassnode shared in a Monday report that Bitcoin selling pressure has eased, but spot market demand remains weak, leaving the cryptocurrency without a clear catalyst for recovery.
Markets now see no hike in October, but inflation is still a major concern

US inflation has returned to the spotlight after the latest Consumer Price Index (CPI) and Producer Price Index (PPI) reports showed a significant acceleration in price pressures. The data raised concerns that the Federal Reserve may need to maintain restrictive monetary policy for longer, pushing interest-rate expectations higher and putting pressure on stocks and gold.

The US Dollar fell. Gold didn't rally. That tells you everything
Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.