Investing.com — Canada’s labour market will take centre stage next week as investors and policymakers assess whether trade tensions are beginning to weigh more heavily on hiring and the economy, with September employment data likely to carry significant weight for the Bank of Canada’s next policy decision.
The jobs report is due Friday and follows a sharp decline in employment in August. CIBC Capital Markets expects only a modest rebound in hiring, while warning that new U.S. tariffs could continue to weigh on manufacturing employment and push the unemployment rate higher.
CIBC expects Canada’s unemployment rate to edge higher as tariff-related pressures weigh on staffing, although it sees the labour market recovering if a trade agreement with the United States is reached. The bank also expects August trade data to show a wider surplus, giving investors two key indicators of how trade tensions are affecting the economy.
CIBC forecasts employment to rise by 5,000 in September, compared with the market expectation of a 9,200 increase and following a 41,700 decline in August. The unemployment rate is forecast to rise to 6.5% from 6.4%, matching the market consensus.
The bank said new U.S. tariffs may have hurt hiring in manufacturing, although companies could instead be holding on to workers while cutting hours in the hope that a trade deal will be reached. CIBC expects the jobless rate to rise modestly before year-end because of tariff-related pressure on affected industries.
The employment report will be closely watched by the Bank of Canada because September’s labour-market performance could provide a clearer indication of economic slack. CIBC said the central bank has more reason than the U.S. Federal Reserve to consider weakening economic conditions when assessing whether higher energy prices will feed into broader inflation.
Canada’s trade data, due Tuesday, is also expected to show some improvement. CIBC forecasts the merchandise trade surplus to widen to C$1.5 billion in August from C$800 million in July, helped by a rebound in exports and higher energy shipments. U.S. trade data also points to a broad increase in imports, suggesting Canadian exports outside energy may have strengthened as well.
The Canadian data comes as CIBC sees tariff uncertainty continuing to weigh on the economy. Recent developments in the steel industry suggest that the impact of tariffs imposed in 2025 has not fully faded, despite negotiations in August failing to resolve the issue.
Source: ca.finance.yahoo.com
