Updated Top Canadian Economic Headlines
Top Economic News in Canada (October 2025) – Updated October 17 / 2025
Here are the top Canadian economic headlines for this week, along with full details for each major story.
Bank of Canada Forecasts ‘Soft’ Growth
The Bank of Canada expects that Canadian economic growth will be “soft” during the second half of 2025, citing the recent U.S. tariffs and broader trade uncertainty as central factors. The central bank cut its policy rate by 25 basis points to 2.5% in September, the first reduction since March, which was a direct response to economic and labour market weakness from trade tensions with the U.S.. Economists now predict Canada will avoid a recession in the third quarter, with Toronto-Dominion Bank forecasting 0.8% growth and Desjardins Group projecting 0.4%. Further strengthening is anticipated in Q4, potentially up to 1.5%.
Canadian Labour Market Surges
Labour market data for September revealed that Canada added 60,000 jobs, far surpassing expectations, and helping offset earlier losses. The gains were distributed across manufacturing, agriculture, energy, and wholesale trade, sectors that have been hardest hit by tariffs. While this boost in employment is positive, the unemployment rate remained steady at 7.1% due to a significant expansion in the labour force. The strong jobs print has reduced market expectations of another rate cut from the Bank of Canada, but much will depend on upcoming inflation data.
Tariffs Deepen Trade Deficit and Export Decline
Canadian exports fell by 2.8% in August, driven primarily by increased tariffs from the U.S., which were doubled to 50% for metal-related sectors. This resulted in the second-largest goods trade deficit on record, as reported by RBC’s economic analysis. The disruption has caused ongoing headwinds in the manufacturing sector and has led to cautious consumer spending and declining business investment.
Signs of Mild Recession and High Unemployment
Export Development Canada (EDC) forecasts economic growth of just 0.9% for 2025, with a minimal uptick expected next year. Unemployment is near a four-year high, holding steady at 7.1% after a run-up earlier this year. The EDC highlights that trade tensions, commodity price drops (especially crude oil, which fell 15% over the last year), and persistent structural issues such as slow population growth, productivity challenges, and high consumer debt are making Canada’s recovery fragile. Further rate cuts by the Bank of Canada are expected later this year.
Consumer Spending and Housing Market Dynamics
RBC reports that consumer spending regained momentum in September after a quieter August, demonstrating resilience despite economic headwinds. Housing market data shows mixed results, with regional disparities continuing. Easing ownership costs from previous interest rate cuts may begin to fade, and new policies or fiscal spending could influence future growth.
Statistics Canada: Monthly Economic Analysis
Statistics Canada’s latest tracker offers a granular look at trends in employment, business openings and closures, weekly earnings, GDP, CPI, exports and imports, and sales volumes. The unemployment rate, GDP growth, inflation, and job vacancies remain critical data points highlighting the ongoing economic uncertainty.
These stories reflect a Canadian economy grappling with external trade shocks, cautious consumer sentiment, and persistent structural challenges, but with some signs of resilience in the job market and consumer spending.
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