What’s Going on in the Canadian Economy Right Now?
The Canadian economy continues to demonstrate resilience in the face of evolving economic pressures. The S&P/TSX Composite Index hit a new intraday record of 25,875.61 on May 15, marking a significant recovery from recent corrections and signalling improving investor sentiment (Morgan & Heinzl, 2025). Sectors like industrials and gold contributed strongly, supported by stable commodity prices and a shift in capital flows toward defensive assets.
Yet, this optimism is tempered by signs of economic softening. Canada’s unemployment rate rose to 6.9% in April, the highest level in eight years outside the pandemic. Job losses were concentrated in sectors exposed to global trade tensions, such as manufacturing and retail (Benchetrit, 2025). At the same time, the inflation rate slowed to 1.7%, mainly due to the removal of the consumer carbon tax and declining oil prices. However, core inflation rose to 3.2%, reflecting persistent upward pressure on essential goods and services (Shin & Thanthong-Knight, 2025).
The Bank of Canada’s upcoming rate decision on June 4 remains in focus. While March retail sales rose 0.8%, much of the gain was driven by auto sales ahead of expected tariffs. Retail activity excluding autos and gas was flat, reinforcing the view that consumer spending is under pressure. Economists remain divided on whether a rate cut is likely, with some now suggesting it’s a close call given the tension between inflation risks and economic softness (Suhanic, 2025).
On the trade front, Canada has eased most retaliatory tariffs originally imposed in response to U.S. actions, particularly those affecting manufacturing, health, and food sectors. This de-escalation is expected to reduce short-term inflation risks and improve the country’s growth outlook (Decloet, 2025).
While there are still risks ahead, from shifting trade policies to uncertain global demand the resilience in Canadian markets and the government’s measured response to trade conflicts provide a stabilizing force as we move into summer.
What This Means for Your Financial Plan
In times of market volatility and economic uncertainty, emotional reactions can lead to impulsive financial decisions that may hinder long-term success. While it’s natural to feel uneasy amid rising inflation, changing interest rate expectations, and global trade shifts, it’s essential to stay focused on your long-term goals.
Rather than reacting to short-term headlines, now is the time to revisit your financial plan with discipline and clarity. A well-structured strategy, aligned with your personal goals, risk tolerance, and time horizon, offers the best defence against uncertainty. Partnering with a trusted financial advisor can help ensure your strategy remains resilient and responsive to change.
If you're not currently working with an advisor or are wondering what to look for in one, we encourage you to check out our blog post: How to Choose a Financial Advisor, it offers practical insights to help you find the guidance that best fits your needs.
Whether you're a current client or someone looking to take the next step toward financial success, Alpen Investment Advisors is here to guide you every step of the way. Based in North Vancouver, our team, led by Jon Alpen, brings over 18 years of experience in helping clients grow, preserve, and navigate their wealth. With expert guidance, tailored solutions, and a steadfast commitment to your success, we are dedicated to supporting your unique financial journey.
Reach out to us today at jonathan@alpenia.ca to start or continue building your financial future with confidence and clarity.
References
Benchetrit, J. (2025, May 10). Canada’s unemployment rate ticked up to 6.9% in April, matching pre-pandemic high | CBC News. https://www.cbc.ca/news/business/labour-force-survey-april-2025-1.7530855#:~:text=Canada’s%20unemployment%20rate%20ticked%20up%20to%206.9%20per%20cent%20in,years%20outside%20of%20the%20pandemic.
Decloet, D. (2025, May 14). Tariffs on U.S.drop to “nearly zero” with exemptions. Financial Post. https://financialpost.com/commodities/canadas-new-tariffs-on-us-drop-to-nearly-zero-with-exemptions-oxford-says
Heinzl, C., & Morgan, G. (2025, May 15). Canada’sS&P/TSX Composite Index Hits intraday record. Financial Post. https://financialpost.com/investing/canadas-sp-tsx-composite-index-hits-intraday-record
Shin, M., & Thanthong-Knight, R. (2025, May20). Canada inflation slows on carbon tax end, but core rises. FinancialPost. https://financialpost.com/pmn/business-pmn/canada-inflation-slowest-since-september-on-carbon-tax-end
Suhanic, G. (2025, May 23). Retail sales put a June Bank of Canada rate cut back on the table. Financial Post. https://financialpost.com/news/economy/retail-sales-puts-bank-of-canada-rate-cut-on-the-table
