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Canada’s GDP fell by 0.2% MoM in February, missing expectations for flat growth and reversing January’s 0.4% expansion. However, early estimates point to a modest 0.1% rebound in March, suggesting the slowdown may be temporary. The data reflects uneven momentum in the Canadian economy amid weak industrial output and global demand concerns.

Canada's Core Retail Sales rose 0.5% MoM in February, beating expectations of a 0.1% drop, while headline Retail Sales declined 0.4%, matching forecasts. However, preliminary data for March Retail Sales points to a 0.7% rebound, suggesting consumer activity picked up again after a weak start to the year.

Canada’s Raw Material Price Index (RMPI) fell 1.0% month-over-month in March, missing expectations for flat growth. On a yearly basis, prices rose 3.9%, slowing sharply from 9.2% in February. The decline points to easing cost pressures in the early stages of production.

On April 16, 2025, the Bank of Canada kept its key interest rate at 2.75%, ending a streak of seven cuts. The decision reflects caution amid rising trade tensions, particularly due to new U.S. tariffs. Governor Tiff Macklem said the uncertain outlook prevents standard forecasts and outlined two scenarios: one with easing tariffs and stable growth, and another with a global trade war triggering recession and inflation reaching 3.5% by mid-2026. The BoC expects weaker Q2 GDP after 1.8% growth in Q1, and inflation to dip to 1.5% due to lower oil prices and scrapped carbon taxes. The bank remains ready to adjust policy as conditions evolve.

Canada's headline CPI rose by 0.3% MoM in March, softer than expectations of 0.7% and well below February’s 1.1%. On a YoY basis, CPI slowed to 2.3%, down from the previous 2.6% and under consensus. Core CPI, which strips out volatile items, also eased:

• Core CPI MoM: 0.1%, down sharply from 0.7% prior
• Core CPI YoY: 2.2%, down from 2.7%

This broad-based cooling in price pressures may increase expectations for rate cuts by the Bank of Canada in the coming months, especially if the trend persists and aligns with continued moderation in economic activity.

Canada's housing starts fell to 214,200 units in March, down from 221,400 in February and below the expected 239,000. The decline signals a slowdown in residential construction activity, likely influenced by elevated interest rates and affordability concerns. This dip could weigh on housing supply in the coming months, keeping upward pressure on home prices despite softer demand.

Canada’s labor market showed signs of weakness in March as the unemployment rate held steady at 6.7%, slightly above February’s 6.6%, while full-time employment dropped sharply by 62,000 jobs. The participation rate declined marginally to 65.2% from 65.3%, indicating a slight retreat in labor force engagement. Additionally, wage growth for permanent employees slowed to 3.5% year-over-year, down from 4.0% previously. The data suggests a cooling labor market, with both employment and wage momentum easing, potentially raising concerns about the strength of the Canadian economic recovery.

Canada posted a trade deficit of CAD -1.52B in February, missing expectations of a CAD 3.40B surplus and sharply down from CAD 3.13B in January. Exports fell to CAD 70.11B from CAD 74.21B, while imports edged up to CAD 71.63B from CAD 71.08B, reflecting weaker external demand and a mild rise in domestic consumption.

Canadian retail sales fell by 0.6% in January, a larger drop than the expected -0.4%, reversing December’s 2.6% gain. Core retail sales, excluding autos, managed a modest 0.2% increase, beating forecasts of -0.1% but far below the previous 2.9% rise. Preliminary estimates for February indicate another decline of -0.4%, signaling continued consumer spending weakness.

Canada's Consumer Price Index (CPI) rose 2.6% YoY in February, surpassing expectations of 2.1%, and 1.1% MoM, up from 0.6% in January. Core CPI also showed a significant increase, rising 0.7% MoM and 2.7% YoY, both higher than forecasted. Meanwhile, Common CPI reached 2.5% YoY, reflecting broad inflationary pressures across various sectors.

Canada's housing starts fell to 229.0K in February, below the expected 246.0K and the previous 239.3K, signaling a slowdown in residential construction activity amid higher borrowing costs and economic uncertainty.

The Bank of Canada (BoC) lowered its interest rate by 25 basis points to 2.75%, marking a shift in monetary policy amid slowing economic growth. This cut, down from 3.00%, aligns with expectations as policymakers respond to easing inflationary pressures and weaker demand. Markets will now focus on future guidance for potential additional rate cuts.