The national unemployment rate stood at 6.5% in June and, according to the bank, “has hovered in a range of 6½%-7% since the end of 2024.” The bank added that growth “resumed in the second quarter, with growth estimated at 2.5%,” though it cautioned the pickup “largely reflects the unwinding of temporary factors.”
Canada’s economy grew 0.5% in April after a March contraction, a rebound that signalled tightening labour demnd in energy, manufacturing, and construction.
Inflation and economic outlook
Consumer price index inflation rose to 3.2% in May, driven mainly by higher gasoline prices linked to the war in the Middle East, the Bank of Canada said. Excluding gasoline, inflation was 2.2%, with core measures close to 2%.
The Bank of Canada projected inflation will “stay elevated in June and then ease gradually in the coming months, returning to around 2% in early 2027,” noting the forecast depends on oil and gasoline prices. Inflation is expected to average around 2% in 2027 and 2028.
On growth, the Bank of Canada forecast the economy will expand by 0.7% in 2026, followed by 1.8% growth in both 2027 and 2028, with slack “gradually absorbed” as the recovery proceeds — a timeline suggesting a tighter labour market remains years away.