Other economic indicators

Growth remains solid despite risks

The latest economic estimates still point to solid real GDP growth in the United States in the third quarter of around +4.0%, according to the Federal Reserve Bank of Atlanta. These would be impressive results if confirmed, particularly after strong growth in the second quarter and a significant slowdown in job creation. The sources and details that could explain this growth are becoming increasingly unclear given the lack of up-to-date data. The temporary government shutdown is delaying the publication of key economic indicators, such as inflation and the labor market.

The slowdown in employment in recent months was enough for the US Federal Reserve to reduce the federal funds target rate by a quarter of a point, bringing it to a range of 3.75% to 4.00% on October 29.  

Crude oil prices are falling

Economic uncertainty continues to weigh heavily on the oil market and is expected to persist for the rest of the year. Oil benchmarks have remained low since the end of the summer. Forecasts of an increase in global supply and a weakening of demand, particularly in Asia, are gaining momentum. 

Despite relatively low prices, OPEC members have announced further production increases for December. Although the agreed level is lower than initially planned by the group, and future increases have been put on hold until early 2026, the decision to continue gradually increasing supply is keeping downward pressure on prices.  The organization is still trying to regain market share in the face of increased competition from the United States and Canada.

Market conditions still seem to favour WTI, with Brent trading at US$65 at the same time and WTI hovering around US$62, further narrowing the gap between the two global benchmarks.

The loonie is still flying low

The Canadian dollar continued its gentle decline during the fall. The loonie was trading at around 70 cents US in early November, down from 74 cents in June.

The most recent decline in the Canadian dollar against the greenback accelerated in line with statements from the central banks of both countries. The gap between the interest rates of the US Federal Reserve and the Bank of Canada remained unchanged, limiting the value of the loonie against the greenback in recent months but this might change moving forward. See this month's article for more details and the outlook for the loonie in 2026.

The Bank of Canada hints at a pause

Le dernier changement à la politique monétaire de la Banque du Canada était une baisse de 25 points de base à la fin octobre 2025. Le conseil des gouverneurs de la banque centrale canadienne à souligner lors de cette dernière annonce que sa politique monétaire ne pouvait contrer à elle seule le ralentissement que connait l’économie canadienne présentement. Les effets des droits de douane en place sur l’inflation s’avèrent limités jusqu’à présent, même si l’inflation est repartie en légère hausse en septembre. Depuis, de nombreux droits de douane canadiens contre les produits américains ont été abrogés, ce qui devrait aider à contenir l’effet inflationniste que pourraient avoir ces tarifs davantage.

L'inflation est encore maîtrisée au pays, et à 2,25 %, le taux directeur est au point plancher de la fourchette estimée du taux neutre (c.-à-d. il ne stimule ni freine la croissance).

Le taux directeur a cumulé 275 points de réductions au cours des 18 derniers mois. Les taux effectifs aux ménages ont reculé de 150 points depuis, et ceux des entreprises d’environ 205 points. 

Momentum slowly returns nationwide

Activity continues to pick up slowly in the residential resale market, with the number of transactions recorded continuing to increase in the fall. There has been a slight increase in the average price of homes (weighted), but this has been modest as the MLS home price index has been trending downward.

30-year amortized mortgages have remained popular with Canadian households since the policy came into effect in mid-December. This measure allows homeowners to reduce their payments, leaving them with more money to spend elsewhere.

Confidence falls back in August

Canadian business optimism is falling at the start of the last quarter of the year. The CFIB's business confidence index for the coming year fell four points to 46.3 in October. The index has thus fallen back below 50, the neutral level it had regained in September. A reading of 50 means that as many business leaders expect the business environment to deteriorate as they do to improve over the period covered (12 months). 

The index therefore seems to confirm that business leaders remain cautious about the future despite job growth and lower interest rates. It will likely take more economic stability before Canadian businesses regain their optimism.