Growth resilient despite trade bump
Did Canada’s economy grow?
Canada got a better growth number at a useful time. Gross domestic product (GDP) rose 0.5% in April, after a 0.1% decline in March, and the early May estimate pointed to another 0.1% gain. With trade and tariff concerns weighing on confidence, the report suggested the economy was slowing but not sliding.
Peeling back the data, the rebound looked more convincing, with 14 of 20 sectors expanding. The details also mattered: strength was helped by goods-producing industries, including energy, while services continued to grow. Trade policy and an abrupt slowdown in non-permanent-resident immigration have led to weaker, choppier growth, and our team continues to believe a Bank of Canada rate cut by the fall is warranted.
Are U.S. jobs still growing?
The U.S. labour market cooled but did not crack. Non-farm payrolls rose by 57,000 in June, well below expectations of 110,000, while May’s gain was revised down by 43,000 to 129,000. The softer hiring pulse reinforced the message that job growth has slowed from earlier in the year.
The broader signal was more resilient than recessionary. The unemployment rate ticked down to 4.2%, weekly jobless claims remained contained at 215,000, and recent Challenger and JOLTS data (statistics on layoffs and new hires) pointed to a low-fire, steady-demand economy. For the U.S. Federal Reserve, that combination supported patience: growth is cooling, but not enough to force an immediate interest rate cut.
Was the Canada-U.S.-Mexico Agreement renewed?
CUSMA was not extended at the first joint review, which means the agreement moves into annual review cycles. That creates uncertainty, but it does not change the current trade framework. The agreement remains in force, tariff preferences still apply, and the near-term impact is more about planning risk than an immediate disruption to North American trade.
What’s the current market sentiment?
The thread across the week was resilience with less policy visibility. Canada’s growth and U.S. jobs data argued against a downturn, while CUSMA annual reviews added uncertainty to investment plans. Markets can live with slower growth but they will need policy risk to stay contained.
Listen to the latest podcast from the IG Investment Strategy Team for further insights.
