1Q26_ Quarterly Outlook Report_Final_EN - Flipbook - Page 54
T H E P LUMB LI N E | A RETU RN TO F I RS T PRI N CI PL ES
The share of CPI components rising by >3% year-over-year is above its historical average
8%
90%
75%
6%
60%
4%
45%
30%
2%
15%
0%
0%
2019
2021
2023
2025
Range of core measures - LHS
CPI-trim (3-mth annualized rate) - LHS
2% inflation - LHS
% of CPI components with YoY price growth >3% - RHS
Source: BoC October 2025 Monetary Policy Report, Scotia Wealth Management
The labour market has also shown some strength, albeit with weak underlying details as the
economy added only part-time jobs between October and November. Although full-time work
fell in each of October and November, it saw a massive 106k gain in September that kept the yearto-date total comfortably in positive territory for the first eleven months of 2025. The last three
months ending November have seen the economy gain 180.6k jobs, more than making up for the
July-August lull when employment decreased by 106.3k. The unemployment rate fell four tenths
to 6.5%, well below the median consensus estimate of 7% as the labour force shrank by 25.7k,
sending the participation rate lower by two tenths to 65.1% (65.3% expected).
A recent string of strong headline employment gains have pulled the unemployment rate
lower
120
7.2%
80
6.8%
40
0
6.4%
-40
-80
6.0%
Jan 2025
Mar 2025
May 2025
Net employment change (000s) - LHS
Jul 2025
Sep 2025
Nov 2025
Unemployment rate - RHS
Source: Statistics Canada, Bloomberg Finance LP, Scotia Wealth Management
Additionally, recent revisions to Canada’s economic accounts dating back to 2022 likely add to
the BoC’s conviction that it has done all it can on the monetary policy front. Annual real GDP
growth was revised higher by 0.4-0.5 percentage points for each year, bringing 2022, 2023, and
2024 growth to 4.7%, 2.0%, and 2.1%, respectively, for an average growth rate of 2.9% during the
three-year stretch.
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