This pessimism stems from tangible labor market deterioration: The unemployment rate has climbed to 7%, the highest non-pandemic level since 2016, with job growth stagnating for four straight months. Trade-sensitive sectors like manufacturing have been particularly hard hit by U.S. tariff pressures.
Weak data has reinforced expectations for monetary easing, with traders betting the Bank of Canada will extend its rate-cut path (policy rate already lowered from 5% to 2.75%). Friday’s June labor force survey is seen as a critical indicator.
Notably, economic confidence sends mixed signals: The Bloomberg Nanos Composite Confidence Index held steady at 52.1 (above the 50 neutral mark), reflecting net optimism in areas like personal finances and real estate. This divergence underscores structural recovery challenges—while overall confidence hasn’t collapsed, employment uncertainty is dampening consumer momentum, forcing policymakers to balance stabilizing market sentiment with addressing tangible economic weakness.
