{"id":16794,"date":"2026-10-30T13:01:49","date_gmt":"2026-10-30T13:01:49","guid":{"rendered":"https:\/\/www.rbc.com\/en\/economics\/?p=16794"},"modified":"2026-10-30T16:48:50","modified_gmt":"2026-10-30T16:48:50","slug":"post-rate-hike-spotlight-in-canada-turns-to-federal-budget-trade-and-jobs-releases","status":"publish","type":"post","link":"https:\/\/www.rbc.com\/en\/economics\/forward-guidance\/post-rate-hike-spotlight-in-canada-turns-to-federal-budget-trade-and-jobs-releases\/","title":{"rendered":"Post rate hike spotlight in Canada turns to federal budget, trade and jobs"},"content":{"rendered":"\n
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For the week of November 2nd<\/sup><\/strong><\/p>\n\n\n\n

The Bank of Canada followed through on a well-telegraphed interest rate hike this week, but left the potential for additional increases contingent on the evolution of growth and inflation data.<\/p>\n\n\n\n

The details of Thursday\u2019s federal budget will be watched closely for growth measures\u2014see our preview<\/a> of what to expect.<\/p>\n\n\n\n

But so will October\u2019s labour market report next Friday and September\u2019s international trade data on Wednesday for further signs on whether underlying growth remains resilient as the economy continues to absorb the latest round of U.S. tariffs imposed in August.<\/p>\n\n\n\n

We expect total Canadian<\/strong> employment in October rose by 15,000 with the unemployment rate edging down to 6.4% from 6.5% in September. Jobs surprised significantly on the downside in September (-68,000), but with weakness largely concentrated in public-sector roles (education and health workers) rather than heavily trade-exposed private sectors. <\/p>\n\n\n\n

Manufacturing employment did fall in September, but only partially reversed the prior month\u2019s gains and early job openings data from indeed.com points to firming in hiring demand in October.<\/p>\n\n\n\n

This is consistent with our view that tariffs may have stalled progress in the labour market, but are not severe enough to reverse it. Overall, we estimate that roughly 0.4% of Canada’s gross domestic product and employment is tied to U.S. demand for goods on the tariff lists.<\/p>\n\n\n\n

The BoC\u2019s Business Outlook Survey for Q3 aligns with this assessment. Employment outlooks, while soft, remain positive and higher than a year ago. Although lingering uncertainty about the longer-term trade environment is discouraging firms from committing to expanding workforces, most report plans to keep headcounts unchanged. Those reporting expansion plans tend to be linked to public spending or natural resources.<\/p>\n\n\n\n

Pullback expected from U.S. buyers in trade data<\/h4>\n\n\n\n

Canada’s merchandise trade for September will capture the first full month of data since U.S. Section 338 tariffs took effect on Aug. 22. The August release showed Canada\u2019s trade surplus surging higher, in part as exporters front loaded shipments ahead of tariffs being implemented late in the month. A 16% jump in September oil prices likely added to Canada\u2019s energy trade surplus in September, but we expect that reversal in U.S. purchases of newly tariffed products to be evident in a pullback in September non-energy exports.<\/p>\n\n\n\n

We continue to expect new tariffs imposed by the U.S. administration will have a significant impact on directly targeted sectors. However, with more than 80% of Canadian exports to the U.S. still maintaining duty-free access under CUSMA, we anticipate limited spillover to the broader economy.<\/p>\n\n\n\n

And, while the Canadian trade balance will likely move lower, import data will also provide clues about the strength of domestic demand.  Equipment imports, in particular, have been firming in recent months in a positive sign that domestic equipment investment is improving, supported in part by early signs that the AI infrastructure buildout is spreading more significantly into Canada.<\/p>\n\n\n\n

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