A report by the Royal Bank of Canada (RBC) highlights the significant financial impact of decreasing immigration targets on Canada’s economy, estimating a cost of around $50 billion. This has caused persistent labour shortages in many sectors with the job market showing signs of heating up in 2025.
Growth remains sluggish, and spending is expected to increase gradually over the next twelve months, unlike the post-pandemic surge. Companies will therefore need to adapt to new economic conditions, which is likely slow and frustrating.
Higher unemployment rates have been observed in larger cities, including Windsor (ON), Edmonton (AB), Toronto (ON), and Calgary. However, recent data from Statistics Canada reveals an increase in employment by 51,000 in November 2024, primarily in full-time positions, which is offset by a rise in the unemployment rate, which edged up to 6.8 per cent from 6.5 per cent in October 2024.
This figure marks the highest unemployment rate since January 2017, excluding the COVID-19 shutdown periods. In early December, the widely anticipated 50 basis point drop in the Bank of Canada (BoC) rate materialised, signalling that the BoC considers inflation to be relatively under control.
Typically, the rate increases if inflation is high. Consequently, the BoC aims to stimulate spending in Canada’s economy to foster growth. This strategy hopes to encourage Canadians and businesses to increase their spending, potentially leading to a better job market and improved working conditions.
Interestingly, experts predict that these improved conditions may come in the form of flexibility and work-life balance measures, rather than higher wages.
Challenges for newcomers
Ruairi Spillane, founder of Outpost Recruitment and Moving2Canada, provides an analysis of the construction sector in Canada. “Another interest rate drop from the Bank of Canada gives hope for a struggling Canadian economy,” says Spillane.
“The Canadian economy appears set for a squeeze after a period of aggressive interest rate hikes required to combat runaway inflation. Timing when to encourage borrowing again is tricky, making a soft landing uncertain. Concerns around the US economy’s health will make the Canadian economy nervous given their close ties.”
Spillane notes that the construction sector continues to thrive, primarily due to public expenditure, as higher interest rates have choked private investment. This indicates that while certain sectors like construction remain robust, the overall economic outlook requires careful navigation in the coming months.
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