Introduction to Canada’s Economic Growth
For the week of June 23rd, 2025, Canada’s economic growth is expected to slow down following a significant jump in the first quarter, largely driven by front-running tariffs. The upcoming Canadian growth domestic product data is anticipated to reveal a 0.1% increase in April, matching Statistics Canada’s preliminary estimate from a month ago.
Slowdown in Manufacturing Sector
The trade-exposed manufacturing sector has softened, with sales falling sharply in subsectors targeted directly by U.S. tariffs, including transportation equipment and metal products. However, retail sales volumes edged up in April, and early data indicates a jump in oil production in Alberta.
Mixed Indicators for May Output
The advance estimate for May output will be closely watched, as early indicators are mixed. Trade-reliant sectors like manufacturing continued to weaken, with contracting hours worked and employment declining. But other parts of the economy provided an offset, and overall employment still edged higher in May. Data from Indeed.com showed hiring demand stabilizing into June.
Limited Impact on Consumer Prices
Tariffs have impacted production and employment in certain sectors, but it’s likely too soon to see substantial effects in consumer prices. Some import-reliant categories like food and autos have experienced accelerating price growth, but recent upside surprises in consumer prices have predominantly come from domestically produced and consumed services.
Expected Consumer Price Index Growth
For May, Canadian consumer price index growth is expected to edge up 1.8% year-over-year from April’s 1.7%, with excluding food and energy price growth holding steady at 2.6%. The removal of the consumer carbon tax in April in most provinces will continue to keep energy prices well below levels from a year ago.
Conclusion
In conclusion, Canada’s economic growth is expected to slow down due to the impact of tariffs, particularly in the manufacturing sector. However, the effects on consumer prices are limited, and the consumer price index growth is expected to edge up in May. The mixed indicators for May output suggest that the economy is still adjusting to the tariffs, and the upcoming data will provide further insight into the country’s economic growth.
