September rate cut now looks almost certain

The August Labour Force Survey was weak, with employment falling by 66,500 and the unemployment rate rising to a four-year high of 7.1%. While the Bank of Canada always expected some weakness in tariff-impacted sectors like manufacturing and wholesale trade, it’s clear that the employment slump is broadening, with most sectors reporting falls over the past two months. A September rate cut is now almost certain, and markets are increasingly coming around to our view that a December rate cut is likely too. However, there was at least some good news this week, with the July trade data making for encouraging reading.