Holt also flagged concerns about the reliability of the latest jobs data, noting that “if last year’s seasonal adjustment factor had been used, job gains would have been closer to 20,000, just a third of the reported figure.”
Broader economic challenges have complicated the BoC’s outlook. United States Section 232 tariffs on Canadian exports—including softwood lumber and kitchen cabinets—are set to take effect October 14, with further threats looming over other sectors.
While most Canadian exports remain protected under the CUSMA exemption, targeted industries are expected to feel the pinch. “Preserving Canada’s CUSMA tariff exemption remains critical for the near-term outlook,” Fan said.
Despite these headwinds, RBC expects the Canadian economy to return to modest growth in Q3, with GDP forecast to rise at an annualized 0.5%. The federal budget update in November is anticipated to include larger deficits, which could provide some offsetting support through increased government spending.
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