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Ontario Economy Gains Support from Firmer Domestic Demand, TD Says

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Firmer domestic demand is providing some support to Ontario's economy, helped by improving housing affordability, inflation at 2.0% and rising real wages, according to TD Economics in a Tuesday note.

However, the economy in Canada's wealthiest province continues to face significant headwinds from weak housing construction, elevated unemployment, higher mortgage costs and US tariff exposure in the steel and auto sectors, said TD.

Less trade-exposed sectors have remained relatively resilient, while manufacturing activity and employment are showing tentative signs of stabilization, wrote bank economist Rishi Sondhi in the note.

Ontario's manageable fiscal position, along with progress on interprovincial trade and labor mobility, provides additional support.

"These supports should help keep growth positive through 2026 and leave the province better positioned for a rebound next year, provided tariff risks do not intensify further," added Sondhi.

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