Today's GDP data showed Canada's economy remained on "shaky ground" through the first quarter of 2026, while today's payroll data "paint an even more fragile picture" of the economy, said Royce Mendes over at Desjardins.
While Canadian gross domestic product advanced 0.2% month over month in February, in line with consensus, growth tailed off in March, while Statistics Canada's flash estimate points to a flat reading for the final month of Q1. Both the Desjardins quarterly estimate for GDP by expenditure and GDP by industry are tracking an annualized advance of roughly 1.5%, which is consistent with the Bank of Canada's most recent projection, Mendes noted.
Given the weak handoff, Desjardins agrees with the central bank's forecast for another quarter of roughly 1.5% growth in Q2, he said.
The Survey of Employment, Payrolls and Hours Payroll (SEPH) data, also released Thursday, showed the economy shed 60,000 jobs in February, more than reversing the increase of 44,000 positions in January.
Weakness was relatively broad-based across categories, with losses seen in both trade-exposed and non-trade-exposed sectors. In the past few months, Ontario and Quebec have led the way lower, Mendes noted.
"The GDP and payroll data released today are consistent with an economy unlikely to produce excess inflationary pressures," Mendes said, before adding: "Should oil prices decline in the coming months, the Bank of Canada can remain on the sidelines, confident that the temporary effects of higher oil prices will not generate a sustained period of high inflation."