For the week of July 19–25, 2025:
Major economic headlines in Canada this week highlight a continued economic contraction and ongoing impacts of trade tensions:
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The Canadian economy is expected to contract by 0.8% in both the second and third quarters of 2025, reflecting weak private investment which is forecasted to fall 13% in Q2 and another 6.9% in Q3. Consumer inflation is relatively low but predicted to rise slightly from 1.8% to 1.9% in Q3. The private sector job vacancy rate remains stable at 2.8%, indicating persistent labour market tightness amid supply chain and tariff pressures.
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Trade disruptions and U.S. tariffs are significant challenges, with long-term supply chain disruptions expected especially in wholesale and manufacturing sectors due to Canada-U.S. border delays. Businesses report increased pricing pressures but cautious optimism as some firms improved outlooks, particularly exporters, although investment and hiring remain cautious.
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The Bank of Canada is holding its policy interest rate steady at 2.75% as inflation cools but remains a concern due to tariffs and ongoing domestic pressures. The central bank continues a data-driven approach amid uncertainty around trade and global conditions.
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The federal government announced over $3.2 billion in funding to enhance newcomer economic integration and address labour shortages in sectors like healthcare and skilled trades, aiming to boost productivity and growth by filling critical job vacancies across provinces.
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Business confidence is improving moderately, especially among small and medium-sized businesses, although overall sentiment remains below historical averages due to trade and economic uncertainties. The unemployment rate has risen recently to 7.0% as of May 2025, its highest outside pandemic conditions, reflecting economic softness.
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New government measures include restricting foreign steel imports to protect Canadian industries, reflecting ongoing trade policy adjustments amid international tensions.
These developments depict a cautious Canadian economic outlook marked by contraction, tempered inflation, trade-related challenges, and targeted policy responses to maintain stability and support labour markets
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