The Consumer Price Index (CPI) rose 2.4% on a year-over-year basis in September, up from a 1.9% increase in August. The acceleration in headline inflation from 1.9% in August was also larger than the median projection in a Bloomberg survey of economists, which was 2.2%.

On a year-over-year basis, gasoline prices fell less in September (-4.1%) compared with August (-12.7%) due to a base-year effect, leading to an acceleration in headline inflation. Excluding gasoline, the CPI rose 2.6% in September, after increasing 2.4% in August.

A slower year-over-year decline in prices for travel tours (-1.3%) and a larger increase in prices for food purchased from stores (+4.0%) also contributed to the upward pressure in the all-items CPI in September.

The CPI rose 0.1% month over month in September. On a seasonally adjusted monthly basis, the CPI was up 0.4%.

Gasoline prices fell 4.1% year over year in September after a 12.7% decrease in August. The smaller year-over-year decline was primarily due to a base-year effect. In September 2024, prices fell 7.1% month over month due, in part, to lower crude oil prices amid growing concerns of weaker economic growth, particularly in China and the United States. In September 2025, gasoline prices rose 1.9% monthly following refinery disruptions and maintenance in the United States and Canada, which put upward pressure on prices.

On a year-over-year basis, prices for travel tours fell 1.3% in September following a 9.3% decline in August. Despite typically declining on a month-over-month basis in September, travel tour prices rose 4.6% in the month. This was a result of higher prices for destinations in Europe and some parts of the United States, as significant events in destination cities put upward pressure on hotel prices.

Consumers paid 4.0% more year over year for food purchased from stores in September, following a 3.5% increase in August. Faster price growth was driven by increased prices for fresh vegetables (+1.9% in September, compared with -2.0% in August) and sugar and confectionery (+9.2% in September, compared with +5.8% in August).

Year-over-year grocery price inflation has generally trended upward since its most recent low in April 2024 (+1.4%). Grocery items contributing to the general acceleration included fresh or frozen beef and coffee, both due, in part, to lower supply.

Tuition fees, priced annually in September, increased 1.7% in 2025 compared with a 1.8% increase in 2024. Aside from 2019, the 2025 increase was the smallest since 1976, when the index was unchanged (0.0%).

In 2025, students from Prince Edward Island (+4.7%) experienced the largest price increase. At the same time, students from Nova Scotia (+1.1%) and Ontario (+1.1%) had the smallest increase, coinciding with a freeze on tuition fees in both provinces.

Bank of Canada Deputy Governor Rhys Mendes recently warned that traders may be putting too much emphasis on its two “preferred” core inflation measures, the so-called trim and median gauges.

In September, both CPI-median and CPI-trim came in hotter than economists were expecting. The average of these metrics was 3.15% in September, while the three-month moving average accelerated to 2.7%.

Mendes said the central bank is weighing a broader suite of gauges that suggest underlying price pressures are closer to its 2% target.

Shelter inflation rose 2.6% on an annual basis, while CPI excluding food and energy was 2.4%. CPI excluding eight volatile components and indirect taxes was 2.8%, up from 2.6%.
CPI excluding taxes accelerated to 2.9% from 2.4% the previous month.

The share of components within the consumer price index basket that are rising 3% and higher — another key metric that policymakers are watching closely — declined slightly to 38%.

All 10 Canadian provinces saw prices rising at a faster year-over-year pace in September compared with August. Quebec experienced the steepest price growth, reaching 3.3% last month.

Rent prices also accelerated nationally to 4.8%, led by a 9.8% increase in Quebec. Slower rent price growth of 1.8% in British Columbia moderated the national increase, the report noted.

Bottom Line

The report shows that underlying price pressures remain elevated, raising questions about how quickly the central bank can proceed with rate cuts to aid the tariff-hit economy.

Still, the acceleration in headline and most core measures was driven by a gasoline price base-year effect — a possible reason for analysts to look through the print.

Traders in overnight swaps pared bets on a rate cut next week, lowering the odds to about 65% from close to 80% before the report. The loonie jumped to the day’s high against the US dollar. Canadian debt fell across the curve, with the two-year yield rising about three basis points to a session high at 2.38%.

The ongoing trade war with the US drove the Bank of Canada to lower its policy rate by a quarter of a percentage point to 2.5% in September, marking the first cut in six months.

During their deliberations last month, some members of its governing council argued that more support would likely be needed given the softness in the economy, notably if the labour market weakened further.

Bank of Canada Governor Tiff Macklem recently described Canada’s labour market as “soft,” despite data showing the country added 60,400 jobs in September, which only partially reversed a decline of more than 100,000 positions over the previous two months.

The central bank will have to weigh recent economic weakness against concerns about firm core inflation over the past few months. The BoC will cut the overnight policy rate again by 25 bps to 2.25%, responding to its concern for the sectors hardest hit by tariffs, along with a housing market suffering from negative household psychology and overbuilding in the GTA and GVA.

Today’s release of the September housing data by the Canadian Real Estate Association (CREA) showed a pullback on the housing front. The number of home sales recorded through Canadian MLS® Systems declined by 1.7% on a month-over-month basis in September 2025. Nevertheless, it was the best month of September for sales since 2021.

The slight monthly decline was the result of lower sales activity in Greater Vancouver, Calgary, Edmonton, Ottawa, and Montreal, which more than offset gains in the Greater Toronto Area and Winnipeg.

“While the trend of rising sales that began earlier this year took a breather in September, activity was still running at the highest level for that month since 2021, and that was true in July and August as well, said Shaun Cathcart, CREA’s Senior Economist. “With three years of pent-up demand still out there and more normal interest rates finally here, the forecast continues to be for further upward momentum in home sales over the final quarter of the year and into 2026.”

New Listings

New supply dropped 0.8% month-over-month in September. Combined with a slightly larger decline in sales activity, the sales-to-new listings ratio eased slightly to 50.7% compared to 51.2% in August. The long-term average for the national sales-to-new listings ratio is 54.9%, with readings roughly between 45% and 65% generally consistent with balanced housing market conditions.

There were 199,772 properties listed for sale on all Canadian MLS® Systems at the end of September 2025, up 7.5% from a year earlier but very close to the long-term average for that time of the year.

“While there are more buyers in the market now than at almost any other point in the last four years, sales activity is still below average and well below where the long-term trend suggests it should be,” said Valérie Paquin, CREA Chair. “As such, we expect things to continue to pick up steadily in the future.

There were 4.4 months of inventory on a national basis at the end of September 2025, unchanged from July and August and the lowest level since January. The long-term average for this measure of market balance is five months of inventory. Based on one standard deviation above and below that long-term average, a seller’s market would be below 3.6 months, and a buyer’s market would be above 6.4 months.

Home Prices

The National Composite MLS® Home Price Index (HPI) was again almost unchanged (-0.1%) between August and September 2025. Following declines in the first quarter of the year, the national benchmark price has remained mostly stable since April.

The non-seasonally adjusted National Composite MLS® HPI was down 3.4% compared to September 2024. Based on the extent to which prices fell off beginning in the fall of 2024, look for year-over-year declines to shrink in the fourth quarter of the year.

Bottom Line

Homebuyers are responding to improving fundamentals in the Canadian housing market. Supply has risen as new listings surged until May of this year. Additionally, the national benchmark average price is 3.5% lower than it was a year earlier. That decrease was smaller than in August.

The view is nearly unanimous that the Federal Reserve will cut the overnight policy rate again by 25 basis points when it meets again on October 29.

The jury is out on the Bank of Canada’s next move. Their decision date is also October 29. While the stronger-than-expected labour market report might have dissuaded the Bank from easing, all eyes will be on the next CPI report on October 21.

With the Bank of Canada cutting the policy rate halfway through September and another 25-basis-point reduction expected by January, if not sooner, the CREA forecasts sales to rise by 7.7% in 2026.

“Interest rates were always going to be the thing that brought this thing back to life,” Cathcart said in an interview. “While that long-anticipated recovery has been delayed and dampened by trade uncertainty, the Bank of Canada is getting close to dipping out of the neutral range and into stimulative territory.

Did you know that appliances and electronics account for up to 23% of the average monthly electricity bill? The biggest culprits are your fridge (coming in at around 4% of the total bill), and your washer and dryer (coming in at around 3.5% of the total bill). We’re all looking to save some cash where we can, so let’s look at some ways to reduce that monthly energy bill from our appliances and electronics.

Option 1: Use Existing Appliances Smarter

Now I don’t recommend unplugging your fridge or wearing filthy clothes – but there are a few ways to get your appliance and electronics energy use down. First up, in warmer months, line dry your clothes to skip the dryer altogether. Next, clean your existing appliances – from the fridge coils to the lint traps, a clean machine is an efficient machine.

For your electronics, turn off your TV and computer when you’re not using them or use a smart power bar to plug them in. I know there’s plenty of us who just close the laptop at 5pm but taking that extra second to turn it off every day adds up. You can also turn down screen brightness and turn off standby modes.

Option 2: Upgrading Appliances

Looking to replace an old appliance with an energy efficient one this year? It’s a great investment in your home, even if you plan to sell in the next few years. The ROI on new appliances is 60-80% – and that doesn’t even include the cost savings you get each month on your bill. If you’re serious about an appliance upgrade, here are the best of the best Energy Star certified products in each appliance category for 2025.

One thing to look for in a new appliance is that Energy Star logo and certification. The logo is that light blue (or black) box with a white star and cursive ‘energy’. The certification is the manufacturer’s assurance that the product meets Federal Government standards for minimum energy performance standards, typically defined as 10-65% more efficient that traditional models (depending on the appliance and scenario). The program is run by Natural Resources Canada and has been in place since 2001.

What About Other Improvements?

Of course, there are many improvements you could make to your home to improve energy efficiency – from upgrading the HVAC system to installing energy efficient windows and doors. In fact, a bigger investment in these areas might be even more cost effective since heating your home accounts for the biggest portion of the average energy bill by far. For those of you who’ve gotten a CMHC insured mortgage in the past 2 years there’s an even bigger incentive to take the plunge. If you’ve upgraded your appliances in that mortgaged home, you can submit an application to the CMHC to get up to 25% of your CHMC insurance fees back! Read more details on that program or give me a call to discuss.

Buying your first home – no matter what your age – is a significant life event. It can bring up all kinds of stresses, both financially and emotionally. Being prepared for what’s to come can put your mind at ease. So, as an expert in the process, here are my best tips to minimize stress, and avoid hiccups and surprises throughout the process.

1. Set Limits: Allot a maximum amount of time for house shopping and scrolling on socials, websites, etc. per day. Don’t get overwhelmed by browsing homes for hours on end, listening to everything you hear on social media, etc.
2. Build Your Team: You’ll need a real estate agent you’re comfortable working with, a lawyer to review documents, a thorough home inspector, and a mortgage broker to get your financing in order. It’s okay to meet a few of each profession and make sure you get the right team lined up. Asking for a referral is a great way to find that perfect someone.
3. Get Pre-Qualified & Pre-Approved: Using a mortgage calculator (or downloading my app) will help you determine what mortgage payments and subsequent home shopping budget you’d qualify for. A pre-approval looks more carefully at your credit score and income, giving you an estimate what a bank would lend YOU. A mortgage broker is the perfect person to help you get it.
4. Create a Budget – And Stick to It: Once you know what your downpayment and ongoing mortgage payments will be, you’ve got to also consider the other costs of buying a home (like an inspection, moving, closing fees, legal fees, etc.). Know how much cash upfront you’ll need and don’t overspend leading up to a home purchase.
5. Spend Time in Prospective Neighbourhoods: It’ll minimize surprises about the neighbours and habits of the residents, plus you’ll get familiar with routines like school buses, playground zones, garbage days and more.
6. Lower Your Expectations: Thinking you’ll a home that’s 100% perfect, at the price you want, with no one else bidding on it… well that’s not very realistic. So set out the absolute must-haves, consider what you can compromise on, and don’t get too wrapped up in just one house. Take your time and wait for one that fits your budget and your (lowered) expectations.
7. Monotask: If you’re trying to choose between houses, calculate expenses, hire a mover, rent a carpet cleaner, and declutter your home all at once, you’ll become scattered and ineffective. Instead of multitasking and trying to get everything done at once, pick just one task at a time and work on that exclusively.
8. Enlist a Support System: If you’re feeling overwhelmed, lean on someone for support. That might be your broker if you’re confused about a process or requirement or a friend who recently bought a house to confirm their experience. It might even be your family or friends to vent or a gym buddy to get a stress-relieving workout in. Don’t ignore the stress as it can build throughout the process.

Today’s release of the August housing data by the Canadian Real Estate Association (CREA) showed good news on the housing front. The number of home sales recorded through Canadian MLS® Systems increased by 1.1% on a month-over-month basis in August 2025. It was the best August for sales since 2021, marking the fifth consecutive monthly increase in activity and a cumulative 12.5% gain since March.

Unlike in recent months, when gains were led overwhelmingly by the Greater Toronto Area (GTA), sales in the GTA were down slightly in August; however, this was more than offset by higher sales in Montreal, Greater Vancouver, and Ottawa.

“Activity has continued to gradually pick up steam over the last five months, but the experience from a year ago suggests that trend could accelerate this fall,” said Shaun Cathcart, CREA’s Senior Economist. “Part of what drives sales at different points in the year is the availability of a lot of fresh property listings for buyers to buy. For the fall market, that always happens right at the beginning of September, and this year was no exception. If last year is any kind of guide, then there is the potential that sales could really pick up in the next month or so depending on how many buyers are drawn off the sidelines, particularly if we see a September rate cut by the Bank of Canada.”

New Listings

“August continued the trend of rising sales in many markets across the country, and while momentum slowed compared to July, much of that is simply a reflection of the time of year,” said Valérie Paquin, CREA Chair. “Now that we are on the other side of Labour Day, new listings are flooding onto the market.”

There were 4.4 months of inventory on a national basis at the end of August 2025, the lowest level since January. The long-term average for this measure of market balance is five months of inventory. Based on one standard deviation above and below that long-term average, a seller’s market would be below 3.6 months, and a buyer’s market would be above 6.4 months.

Home Prices

The National Composite MLS® Home Price Index (HPI) was again almost unchanged (-0.1%) between July and August 2025. Following declines in the first quarter of the year, the national benchmark price has been mostly stable since April, when the market bottomed.

The non-seasonally adjusted National Composite MLS® HPI was down 3.4% compared to August 2024. Based on the extent to which prices fell off beginning in the fall of 2024, look for year-over-year declines to continue to shrink in the months ahead.

Bottom Line

Homebuyers are responding to improving fundamentals in the Canadian housing market. Supply has risen as new listings surged until May of this year. Additionally, the benchmark price was $664,078, which is more than 4% lower than it was a year earlier. That decrease was smaller than in June, and the board expects year-over-year declines to continue shrinking, it stated in a press release.

The view is nearly unanimous that both the Federal Reserve and the Bank of Canada will cut the overnight policy rate by 25 basis points when they meet again this Wednesday, September 17. The Canadian CPI for August will be released tomorrow, and if inflation is relatively stable or down, the Bank could continue to lower rates in October and December as well. This could be what it takes to move potential buyers off the sidelines.

While trade uncertainty is likely to persist, we can expect to see accelerated housing activity during the fall selling season, which is contrary to standard seasonal patterns.

Today’s Labour Force Survey for August was weaker than expected, indicating an excess supply in the labour market and the economy. Employment fell by 66,000 (-0.3%) in August, extending the decline recorded in July (-41,000; -0.2%). The employment decrease in August was mainly due to a decline in part-time work (-60,000; -1.5%). Full-time employment was little changed in August, following a decrease in July (-51,000; -0.3%).

The employment rate—the proportion of the working-age population who are employed—fell 0.2 percentage points to 60.5% in August, the second consecutive monthly decline. The employment rate has been on a downward trend since the beginning of the year, falling 0.6 percentage points from January to August.

The number of self-employed workers fell by 43,000 (-1.6%) in August. Self-employment has trended down in recent months, offsetting gains recorded in the second half of 2024 and in early 2025.

The private sector lost 7,500 jobs last month, while the public sector shed 15,000. Regionally, the provinces of Ontario, Alberta and British Columbia led losses.

Those who were unemployed in July continued to face difficulties finding work in August. Just 15.2% of those who were unemployed in July had found work in August, lower than the corresponding proportion for the same months from 2017 to 2019 (23.3%) (not seasonally adjusted).

The participation rate—the proportion of the population aged 15 and older who were employed or looking for work—fell by 0.1 percentage points to 65.1% in August.

From May to August, the Labour Force Survey (LFS) collects labour market information from students who attended school full-time in March and who intend to return to school full-time in the fall.
The unemployment rate for returning students stood at 16.9% in August, similar to the rate observed 12 months earlier (16.3%) (not seasonally adjusted).

For the summer of 2025 overall (the average from May to August), the unemployment rate for returning students aged 15 to 24 was 17.9%. This was the highest since the summer of 2009 (18.0%), excluding the pandemic year of 2020. The unemployment rate for returning students has increased each summer since 2022 (when it was 10.4%).

The unemployment rate among returning students in the summer of 2025 was higher for men (19.2%) than for women (16.8%).

Employment decreased in the professional, scientific, and technical services sector in August (-26,000; -1.3%), following five months of little change. Despite the monthly decline, employment in the industry was up 36,000 (+1.8%) compared with 12 months earlier.

Employment in transportation and warehousing fell by 23,000 (-2.1%) in August, offsetting a similar-sized increase in July. On a year-over-year basis, employment in the industry was little changed in August.

Fewer people were working in manufacturing in August, down 19,000 (-1.0%). Compared with the recent peak of January 2025, employment in manufacturing has declined by 58,000 (-3.1%).

On the other hand, employment rose in construction (+17,000; +1.1%) in August, offsetting most of the decline in July (-22,000; -1.3%). Employment in construction has recorded little net variation since the beginning of the year, and the increase in August was the first since January.

Employment in Ontario decreased by 26,000 (-0.3%) in August. Compared to the recent peak in February 2025, employment in the province decreased by 66,000 (-0.8%) in August. The unemployment rate in Ontario declined by 0.2 percentage points to 7.7% in August, as the number of people searching for work decreased.

Since the beginning of the year, regions of Southern Ontario have faced an uncertain economic climate, brought on by the threat or imposition of tariffs, including on motor vehicle and parts exports. Across Canada’s 20 largest census metropolitan areas, the highest unemployment rates in August were in Windsor (11.1% compared with 9.1% in January), Oshawa (9.0% compared with 8.2% in January) and Toronto (8.9% compared with 8.8% in January) (three-month moving averages).

In British Columbia, employment decreased by 16,000 (-0.5%) in August, marking the second consecutive monthly decline. Losses in the month were mainly among core-aged men (-13,000; -1.2%). The unemployment rate in British Columbia rose 0.3 percentage points to 6.2%.

In Alberta, employment fell by 14,000 (-0.6%) in August, also the second consecutive monthly decrease. The most significant declines in the month were in manufacturing and in wholesale and retail trade. The unemployment rate in Alberta rose 0.6 percentage points to 8.4% in August, the highest rate since August 2017 (excluding 2020 and 2021).

Employment also declined in New Brunswick (-6,500; -1.6%), Manitoba (-5,200; -0.7%), and Newfoundland and Labrador (-3,200; -1.3%) in August. Meanwhile, Prince Edward Island experienced an employment gain of 1,100 (+1.2%).

Employment held steady for a second consecutive month in Quebec in August. The number of people looking for work increased by 24,000 (+9.0%), pushing the unemployment rate up 0.5 percentage points to 6.0%.

Total hours worked were little changed in August (+0.1%) and were up 0.9% compared with 12 months earlier.

Average hourly wages among employees increased 3.2% (+$1.12 to $36.31) on a year-over-year basis in August, following growth of 3.3% in July (not seasonally adjusted).

Bottom Line

The two-year government of Canada bond yield fell about four bps on the news, while the loonie weakened. Traders in overnight swaps fully priced in a quarter-point rate cut by the Bank of Canada by year-end, and boosted the odds of a September cut to about 85%.

The Bank of Canada has made it clear that it will focus on inflation more than on increasing slack in the economy, and a September cut may still hinge on the consumer price index release, which is due a day before the rate decision.

The August US nonfarm payrolls report was also released this morning, showing that job growth stalled while the unemployment rate rose slightly to 4.3%. Several sectors, including information, financial activities, manufacturing, federal government and business services, posted outright declines in August. Job growth was concentrated in the healthcare and leisure and hospitality sectors.

Markets expect the Fed to cut rates by 25 basis points on September 17. Fed Chair Jay Powell has been under massive pressure from the White House to do so. Barring a meaningful rise in August core inflation measures, the Fed will resume cutting rates.

Statistics Canada released Q2 GDP data, showing a weaker-than-expected -1.6% seasonally adjusted annual rate, in line with the Bank of Canada’s forecast, but a larger dip than the consensus forecast. The contraction primarily reflected a sharp decline in exports, down 26.8%, which reduced headline GDP growth by 8.1 percentage points. Business fixed investment was also weak, contracting 10.1%, mainly due to a 32.6% decline in business equipment spending.

Exports declined 7.5% in the second quarter after increasing 1.4% in the first quarter. As a consequence of United States-imposed tariffs, international exports of passenger cars and light trucks plummeted 24.7% in the second quarter. Exports of industrial machinery, equipment and parts (-18.5%) and travel services (-11.1%) also declined.

Amid the counter-tariff response by the Canadian government to imports from the United States (which has now been rescinded), international imports declined 1.3% in the second quarter, following a 0.9% increase in the previous quarter. Lower imports of passenger vehicles (-9.2%) and travel services (-8.5%; primarily Canadians travelling abroad) were offset by higher imports of intermediate metal products (+35.8%), particularly unwrought gold, silver, and platinum group metals.

Export (-3.3%) and import (-2.3%) prices fell in the second quarter, as businesses likely absorbed some of the additional costs of tariffs by lowering prices. Given the larger decline in export prices, the terms of trade—the ratio of the price of exports to the price of imports—fell 1.1%.

But the report was not all bad news. Consumer resilience was also evident. Household consumption spending accelerated in Q2. Personal spending rose 4.5% compared to 0.5% in Q1. Government spending also notably contributed to growth.

An improvement in housing activity also added to economic activity. Residential investment grew at a firm rate of 6.3%, compared to a decline of 12.2% in the first quarter of the year.

Final domestic demand rose 3.5% annualized, reflecting resilience and perhaps Canadians’ boycott of US travel or US products. However, income growth was up just 0.7% year-over-year (at an annual rate), which pulled the savings rate down one percentage point to 5.0%, potentially hampering consumers’ ability to continue their spending.

Inventories of finished goods and inputs to the production process increased by 26.9%, reflecting the Q1 stockpiling of goods that would be subject to future tariffs.

While Q2 was soft, June GDP was arguably more disappointing at -0.1% m/m, two ticks below consensus. Manufacturing was the surprise, falling 1.5%. Services were mixed, with gains in wholesale and retail offsetting some broader weakness. The July flash estimate was +0.1% (on the firmer side, given some of the soft data thus far), but the June figure makes it clear that the final print can be quite different.

The Bank had Q2 GDP at -1.5% in their July Monetary Policy Report, so the miss was minor. And, the strength in domestic demand highlights the economy’s resilience. One negative is that Q3 is tracking softer than their +1% estimate (closer to +0.5%), but it’s still very early, and things can change materially.

Bottom Line

The odds are no better than even for the Bank of Canada to cut rates when they meet again on September 17. There are two key data releases before then — the August Labour Force Survey, released August 5, a week from today, and the August CPI release on September 16. We would have to see considerable weakness in both reports to trigger a Canadian rate cut next month.

A Fed rate cut is far more likely, as telegraphed by Chair Jay Powell at the annual Jackson Hole confab. The battle between the White House and the Fed has intensified with President Trump’s firing of Governor Lisa Cook, the first Black woman on the Board and a Biden appointee. If Trump were to succeed, it would enable him to appoint a majority of the Federal Reserve Board, potentially allowing him to dictate monetary policy.

Trump wants significantly lower interest rates in the US, but even if he succeeds, only shorter-term rates would decline. The loss of Fed independence could lead to higher, longer-term interest rates, which could likely result in higher fixed mortgage rates in Canada. Moreover, inflation pressures could intensify, leading to continued upward pressure on bond yields and diminishing the potential appeal of floating-rate mortgage loans.

Last week’s release of the July housing data by the Canadian Real Estate Association (CREA) showed good news on the housing front. Following a disappointing spring selling season, National home sales were up 3.8% in July from the month before, with Toronto seeing transactions rebound 35.5% since March. However, the total number of Toronto sales remains low by historical standards.

On a year-over-year basis, total transactions have risen 11.2% since March.

There is growing confidence that the Canadian economy will resiliently weather the tariff trauma. The Canadian dollar is up, and longer-term interest rates have edged downward in the past ten days. Traders are now anticipating a rate cut by the Federal Reserve in September.

Tuesday’s release of the Canadian CPI will provide another data point for the Bank of Canada. Economic growth has held up, in large part because much of the pain from tariffs has been confined to industries singled out for levies, including autos, steel and aluminum.

Shaun Cathcart, the real estate board’s senior economist, said, “With sales posting a fourth consecutive increase in July, and almost 4% at that, the long-anticipated post-inflation crisis pickup in housing seems to have finally arrived. The shock and maybe the dread that we felt back in February, March and April seem to have faded,” as people become less concerned about their future employment.

New Listings

New supply was little changed (+0.1%) month-over-month in July. Combined with the notable increase in sales, the national sales-to-new listings ratio rose to 52%, up from 50.1% in June and 47.4% in May. The long-term average for the national sales-to-new listings ratio is 54.9%, with readings roughly between 45% and 65% generally consistent with balanced housing market conditions.

There were 202,500 properties listed for sale on all Canadian MLS® Systems at the end of July 2025, up 10.1% from a year earlier and in line with the long-term average for that time of the year.

“Activity continues to pick up through the transition from the spring to the summer market, which is the opposite of a normal year, but this has not been a normal year,” said Valérie Paquin, CREA Chair. “Typically, we see a burst of new listings right at the beginning of September to kick off the fall market, but it seems like buyers are increasingly returning to the market.

There were 4.4 months of inventory on a national basis at the end of July 2025, dropping further below the long-term average of five months of inventory as sales continue to pick up. Based on one standard deviation above and below that long-term average, a seller’s market would be below 3.6 months, and a buyer’s market would be above 6.4 months.

Home Prices

The National Composite MLS® Home Price Index (HPI) was unchanged between June and July 2025. Following declines in the first quarter of the year, the national benchmark price has remained mostly stable since May.

The non-seasonally adjusted National Composite MLS® HPI was down 3.4% compared to July 2024. This was a smaller decrease than the one recorded in June.

Based on the extent to which prices fell off in the second half of 2024, look for year-over-year declines to continue to shrink in the months ahead.

Bottom Line

Homebuyers are responding to improving fundamentals in the Canadian housing market. Supply has risen as new listings surged until May of this year. Additionally, the benchmark price was $688,700, 3.4% lower than a year earlier. That decrease was smaller than in June, and the board expects year-over-year declines to continue shrinking, it said in a statement.

While many expect the Fed to ease in September, I’m not sure it will happen. The producer price index came in hotter than expected this week. Fed action will depend mainly on the personal consumption expenditures index (PCE), the Fed’s favourite measure of inflation, which will be out on August 29.

US stagflation worries have emerged with the release of the July employment report, which showed considerable weakness, enough to get the head of the Bureau of Labour Statistics fired. The likelihood of a BoC cut will increase if the Fed begins a series of easing moves as the administration is demanding.

Employment fell by 40,800 jobs in July, a weak start to the third quarter, driven by decreases in full-time work, with most of the decline in the private sector. The jobless rate held steady at 6.9%, even though the number of unemployed people fell. The monthly decline was the largest since January 2022, and excluding the pandemic, it’s the most significant drop in seven years.

The job loss was concentrated among youth ages 15 to 24 who have had a terrible time finding summer jobs this year. The unemployment rate for that group is a whopping 14.6%, the highest since September 2010 outside of the pandemic. The youth employment rate fell 0.7 percentage points to 53.6% in July—the lowest rate since November 1998, excluding the pandemic.

Trump’s tariff turmoil has halted so many crucial financial decisions. Potential homebuyers are deer-in-the-headlights despite the relatively low mortgage rates, strong supply of unsold homes, and lower prices. Potential move-up buyers similarly don’t take action despite the relatively strong bargaining power of buyers.

The employment rate—the proportion of the population aged 15 years and older who are employed—fell by 0.2 percentage points to 60.7% in July and was down 0.4 percentage points from the beginning of the year (61.1% in both January and February).

The number of employees in the private sector fell by 39,000 (-0.3%) in July, partly offsetting a cumulative gain of 107,000 (+0.8%) in May and June. There was little change in the number of public sector employees and in the number of self-employed workers in July.

The unemployment rate held steady at 6.9% in July, as the number of people searching for work or on temporary layoff varied little from the previous month. The unemployment rate had trended up earlier in 2025, rising from 6.6% in February to a recent high of 7.0% in May, before declining 0.1 percentage points in June.

Unemployed people continued to face difficulties finding work in July. Of the 1.6 million people who were unemployed in July, 23.8% were in long-term unemployment, meaning they had been continuously searching for work for 27 weeks or more. This was the highest share of long-term unemployment since February 1998 (excluding 2020 and 2021).

Compared with a year earlier, unemployed job seekers were more likely to remain unemployed from one month to the next. Nearly two-thirds (64.2%) of those who were unemployed in June remained unemployed in July, higher than the corresponding proportion for the same months in 2024 (56.8%, not seasonally adjusted).

Despite continued uncertainty related to tariffs and trade, the layoff rate was virtually unchanged at 1.1% in June compared with a year ago (1.2%). This measures the proportion of people who were employed in June but were laid off in July. In comparison, the layoff rate for the corresponding months from 2017-19, before the pandemic, averaged 1.2%.

There were fewer people in the labour force in July as many discouraged workers dropped out, and the participation rate—the proportion of the population aged 15 and older who were employed or looking for work—fell by 0.2 percentage points to 65.2%. Despite the decrease in the month, the participation rate was little changed on a year-over-year basis.

Despite continued uncertainty related to tariffs and trade, the layoff rate was virtually unchanged at 1.1% in July compared with 12 months earlier (1.2%). This represents the proportion of people who were employed in June but had become unemployed in July as a result of a layoff. In comparison, the layoff rate for the corresponding months from 2017 to 2019, before the pandemic, averaged 1.2% (not seasonally adjusted).

There were fewer people in the labour force in July, and the participation rate—the proportion of the population aged 15 and older who were employed or looking for work—fell by 0.2 percentage points to 65.2%. Despite the decrease in the month, the participation rate was stable on a year-over-year basis.

Employment declined in information, culture and recreation by 29,000 (-3.3%). In construction, employment decreased by 22,000 (-1.3%) in July, following five consecutive months of little change. The number of people working in construction in July was about the same as it was 12 months earlier.

Employment fell in business, building and other support services (-19,000; -2.8%), marking the third decline in the past four months for the industry. Employment also fell in health care and social assistance (-17,000; -0.6%), offsetting a similar-sized increase in June. Compared with 12 months earlier, employment in health care and social assistance was up by 54,000 (+1.9%) in July.

Employment rose in transportation and warehousing (+26,000; +2.4%) in July, the first increase since January. On a year-over-year basis, employment in this industry was little changed in July.

The number of jobs declined in Alberta (-17,000; -0.6%) and British Columbia (-16,000; -0.5%), while it increased in Saskatchewan (+3,500; +0.6%). There was little change in the other provinces.
Total hours worked in July were little changed both in the month (-0.2%) and compared with 12 months earlier (+0.3%).

Average hourly wages among employees increased 3.3% (+$1.17 to $36.16) on a year-over-year basis in July, following growth of 3.2% in June (not seasonally adjusted).
Employment also declined in May in transportation and warehousing (-16,000; -1.4%); accommodation and food services (-16,000; -1.4%), and business, building and other support services (-15,000; -2.1%).

Bottom Line

The two-year government of Canada bond yield fell about four bps on the news, while the loonie weakened. Traders in overnight swaps fully priced in a quarter-point rate cut by the Bank of Canada by year-end, and boosted the odds of a September cut to about 40%, from 30% previously.

Oddly enough, manufacturing payrolls rose in July despite the tariffs. This was the second consecutive monthly gain for a sector that one would expect to be most affected by the trade war. Manufacturing employment has fallen year-over-year.

This was an unambiguously weak report, but it comes hard on the heels of a robust report. Averaging the two months of data suggests there is an excess supply in the economy. But we will need to see a decline in core inflation for the Bank of Canada to resume cutting interest rates.

Traders are now expecting the US central bank to cut interest rates when it meets again in September. With any luck at all, this will pressure the Bank to cut rates as well, but only if the interim two inflation reports show an improvement, and the labour market remains weak. The next jobs report is on September 5, and the Bank of Canada meets again on September 17.

Most market participants did not expect the Bank of Canada to cut rates in late July. Incoming economic data paint a somewhat stronger picture. Consumer sentiment remains relatively weak in the face of considerable tariff uncertainty, despite the record highs achieved by both the US and Canadian stock markets.

Business investment has slowed considerably, and layoffs have commenced in the hardest hit sectors (think autos, aluminum and steel).

Longer-term interest rates have risen considerably since March, and housing activity remains tepid in many regions of the country. The recently released June housing data show a continued rise in sales, a fall in new listings, and flat home prices. This could well signal a turnaround in housing as we approach 2026.

While Canada’s employment report was not quite as strong as the rip-roaring headline 83,100 job gain would suggest, it nevertheless reflects the resiliency of the Canadian economy. Specifically, the pullback in the unemployment rate (down 0.1 ppt to 6.9%) is very encouraging. It’s rare for the jobless rate to retreat, even for a month, during a recession. Moreover, the unemployment rate is arguably the most reliable data point in the monthly Labour Force Survey.

June’s jobs report showed that public administration employment continues to grab an increasing share of the job market. Since 2016, public administration employment has increased by almost 40%, or more than twice the growth seen in the rest of the job market. Note that we use ‘public admin’ here, not the ‘public sector’, since the latter encompasses healthcare and education jobs as well. While the pandemic widened the gap, public administration has been outpacing job growth both before the disruption and after 2022.

Looking ahead, this source of job growth is likely to diminish, as federal hiring is expected to slow down. The Liberal platform targeted $13 billion in savings from “government productivity” by FY28/29, and some of that is presumably going to happen sooner due to more immediate budget pressure. We are likely to see Canadian federal budget deficits of over $60 billion.

The latest inflation data for June torpedoed the Bank of Canada’s potential easing on July 30. Headline CPI inflation posted a 1.9% year-over-year pace, up from 1.7% in May. More onerously, the core measures of inflation averaged 3.1% year-over-year gains, much too high for the Bank’s liking.