By Erik Hertzberg
(Bloomberg) — Bank of Canada Governor Tiff Macklem called Canada’s labour market “soft,” despite recent data that showed the country added 60,400 jobs in September.
Macklem said last month’s employment gain only partially reversed the more than 100,000 positions shed in the previous two months. Speaking to media from Washington, where he was attending meetings of the International Monetary Fund and World Bank, he also called the data “volatile.”
“The labour market, and the economy in general, it’s not down sharply, but it is certainly soft,” he said Friday, also pointing out the unemployment rate has risen to 7.1% from 6.6% at the start of the year.
“You’ve seen job losses in the heavily tariffed sectors. In the rest of the economy, you’re really seeing very soft hiring. I think that’s consistent with the fact that firms are feeling the uncertainty.”
The Bank of Canada next sets rates on Oct. 29. After Macklem’s comments, traders in overnight swaps upped their bets that the bank would cut at that meeting, putting the odds at two-thirds from about a half.
U.S. tariffs continue to hit the northern nation’s exports and business investment. Macklem said the central bank is expecting soft growth in the second half of the year after a contraction between April and June. While he flagged surprisingly strong consumption in the second quarter, he said that’s likely to ease.
The central bank expects about 1% growth in the near term, which Macklem said is a “little below” potential growth. Because immigration has sharply slowed in Canada, potential growth is likely below 2%, he said.
“It’s going to be growth, but it’s going to be soft growth. It’s not going to feel very good and it’s certainly not going to be enough to close the output gap,” he said.
The bank will release a base projection in its October monetary policy report for the first time since January. The forecast will “look forward against the background of heightened uncertainty,” Macklem said.
“We will need to be humble about our forecasts and we will continue to put a lot of emphasis on the risks,” he said.
Statistics Canada reports inflation next Tuesday. On a yearly basis, headline inflation is close to the 2% target, but some core measures remain elevated. Still, the bank has repeatedly faded its so-called trim and median gauges, saying instead that underlying price pressures are rising at a 2.5% annual pace.
Asked about Canada’s upcoming federal budget, Macklem said he would hold off on commenting until Finance Minister Francois-Philippe Champagne releases the document on Nov. 4. The fiscal plan is expected to contain major investments in capital projects, while trimming operational spending.
Still, Macklem spoke generally about many economies needing investments in infrastructure, which he said “has the capacity to unleash private investment by lowering the cost of doing business.”
–With assistance from Mario Baker Ramirez and Nojoud Al Mallees.
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Last modified: October 18, 2025