{"id":221180,"date":"2025-10-18T02:15:07","date_gmt":"2025-10-18T02:15:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/221180\/"},"modified":"2025-10-18T02:15:07","modified_gmt":"2025-10-18T02:15:07","slug":"bank-of-canadas-macklem-sees-slow-growth-soft-job-market-ahead-of-rate-decision","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/221180\/","title":{"rendered":"Bank of Canada\u2019s Macklem sees slow growth, soft job market ahead of rate decision"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Bank of Canada Governor Tiff Macklem in Ottawa in September. Mr. Macklem says he expects the Canadian economy to grow at a sluggish pace in the third and fourth quarters.Blair Gable\/Reuters<\/p>\n

Bank of Canada<\/a> Governor Tiff Macklem expects slow economic growth and a soft labour market through the back half of the year as U.S. tariffs and uncertainty over the future of continental trade weigh on business investment and hiring in Canada. <\/p>\n

Speaking to reporters from the annual International Monetary Fund and World Bank meetings in Washington, Mr. Macklem said he expects the Canadian economy to grow at a sluggish pace in the third and fourth quarters, and he cautioned against putting too much weight on September job numbers, which showed a rebound in employment. <\/p>\n

\u201cIt\u2019s going to be growth, but it\u2019s going to be soft growth. It\u2019s not going to feel very good, and it\u2019s certainly not going to be enough to close the output gap,\u201d Mr. Macklem said, noting that the bank is projecting growth in gross domestic product of around 1 per cent in the second half of the year. <\/p>\n

He gave no indication of whether the central bank would cut interest rates again at its meeting on Oct. 29. There are several key pieces of data still to come, he said, including September inflation numbers and the bank\u2019s quarterly business survey, which will be published next week. <\/p>\n

Canada\u2019s economy added 60,000 jobs in September, rebounding from two months of losses<\/a><\/p>\n

Ten charts that explain Canada\u2019s messy and complicated housing markets Comments<\/a><\/p>\n

The bank lowered its policy rate to 2.5 per cent last month, the first rate cut since March. It resumed monetary policy easing after deciding that downside risks to Canada\u2019s tariff-battered economy outweighed upside risks to inflation. <\/p>\n

Financial markets are pricing in a roughly 80-per-cent chance of another quarter-point cut at the bank\u2019s October meeting, according to LSEG data. <\/p>\n

Much of the debate around the upcoming rate decision centres on how Mr. Macklem and his team are thinking about Canada\u2019s labour market. After two months of significant job losses, employment rebounded by 60,000 in September, although the unemployment rate remained at an elevated 7.1 per cent. <\/p>\n

Mr. Macklem suggested the bank wouldn\u2019t put much weight on a single jobs report, given that monthly numbers can be volatile. <\/p>\n

\u201cBig picture, what you\u2019re seeing in the labour market is the heavily tariffed sectors are being severely affected,\u201d Mr. Macklem said, pointing to job losses in steel, aluminum, autos, lumber and the transportation industries that support them. <\/p>\n

Beyond those sectors, \u201cyou\u2019re not seeing a lot of layoffs, but you\u2019re also not seeing a lot of hiring,\u201d he said. <\/p>\n

\u201cSo, if you have a job, you probably still have a job, unless you\u2019re in one of those highly affected sectors. But you\u2019re seeing youth unemployment is going up because new entrants into the labour market, it\u2019s taking them longer to find a job.\u201d<\/p>\n

The Canadian economy contracted 1.6 per cent in the second quarter, led by a sharp pullback in exports. Mr. Macklem said he doesn\u2019t expect another big decline in exports, \u201cbut neither are we expecting a rapid rebound.\u201d<\/p>\n

Business investment is likewise expected to remain weak, Mr. Macklem said, as companies remain apprehensive until they have a better sense of the Canada-U.S. trade relationship. Canadian negotiators were back in Washington this week trying to secure relief from President Donald Trump\u2019s sector-specific tariffs, but they have not made any breakthroughs.<\/p>\n

Both countries have also launched consultations ahead of the review of the United States-Mexico-Canada Agreement on free trade, which will happen next year.<\/p>\n

\u201cUncertainty about U.S. trade policy has come down a bit since where we were in February, March, April, even July. I think uncertainty, though, is shifting now to what happens to CUSMA,\u201d Mr. Macklem said, referring to the free-trade pact. \u201cUntil businesses have clarity on what is the outcome of that review, that is going to hold back business decisions.\u201d<\/p>\n

The one bright spot for the Canadian economy has been consumer spending, which remained strong through the second quarter. Mr. Macklem said he expects consumption growth to continue, but at a more moderate pace. <\/p>\n

Canada\u2019s central bankers will head into the next rate decision armed with a new economic forecast in the quarterly Monetary Policy Report.<\/p>\n

Since January, the Bank of Canada has held off on publishing a central forecast, given the huge level of uncertainty around U.S. trade policy and its implications for Canada. Instead, it has published upside and downside scenarios. <\/p>\n

\u201cWe will be using a new base-case projection to look forward,\u201d Mr. Macklem said. \u201cAgainst the background of heightened uncertainty, we will need to be humble about our forecasts, and we will continue to put a lot of emphasis on the risks.\u201d<\/p>\n

There\u2019s one other key piece of uncertainty: the federal budget, which will be published on Nov. 4, only a few days after the interest rate decision. The Parliamentary Budget Officer and a number of private sector forecasters expect a big jump in Ottawa\u2019s deficit, given increased spending on defence and infrastructure combined with weak revenue growth. <\/p>\n

Mr. Macklem said the bank will need to see the budget before adjusting its forecasts for the Canadian economy. But he said the broad strokes of Prime Minister Mark Carney\u2019s approach to fiscal policy are becoming clear, with plans to shrink the government\u2019s operating budget while spending more on major infrastructure.<\/p>\n

\u201cWhen we look at the budget, we will be looking at both the demand impulse but also the potential to build the economy\u2019s supply capacity \u2026 It\u2019s that balance between demand and supply in the economy that we look at closely,\u201d he said. <\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Bank of Canada Governor Tiff Macklem in Ottawa in September. Mr. Macklem says…\n","protected":false},"author":2,"featured_media":221181,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[901,888,902,879,877,903,45,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-221180","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/221180","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=221180"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/221180\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/221181"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=221180"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=221180"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=221180"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}