Canada: North America Economic Research

Research evidence excerpt

Michael S Hanson (1-212) 622-8603

JPMorgan Chase Bank NA

Bennett Parrish (1-212) 622-9003

JPMorgan Chase Bank NA

North America Economic Research

07 August 2026

Canada

July's LFS caps a strong three-month run for jobs

We lift our 2Q real GDP forecast to 3.0%q/q, saar

Alberta and Quebec weigh separation votes

After contracting modestly around the turn of the year, the

Canadian economy looks to have found firmer footing into

the middle of this year. Monthly GDP data suggest that activity expanded above a 3%ar pace in 2Q, and the latest signal

from the labor market is that better momentum carried into

the start of 3Q. Employment surged 75.1k in July, a third

straight gain that pushed the cumulative increase since April

to 181.1k. Last month’s report capped the strongest threemonth gain since the US began escalating tariffs a year and a

half ago. This reacceleration comes even as the trade war

continues to weigh on employment in the more export-oriented goods sector (Figure 1).

Figure 1: Labour Force Survey employment

Change in thousands, 6-month moving average

80

60

Service-producing sector

40

20

Goods-producing sector

2023

2024

Source: Statistics Canada, J.P. Morgan

2025

in upcoming reports. Our revisions lift full-year 2026 growth

to 1.4% on a Q4/Q4 basis, in line with the BoC’s latest projections from the July Monetary Policy Report.

Figure 2: J.P. Morgan real GDP projections, 2026

%4q/4q

3.0

2.5

2.0

1.5

1.0

0.5

0.0

-0.5

Old

1Q

2Q

3Q

New

4Q

4Q/4Q

Source: Statistics Canada, J.P. Morgan

The BoC will not provide updated projections until October,

but we think the recent improvement in the labor market and

activity data more broadly will lead the Bank to revise its

growth figures higher by the time the next MPR is released.

We are leaving our projection for 1.4%ar growth in 2H26

unchanged because renewed threats from the US administration to raise tariffs mean the trade drag should persist into the

second half of the year, and the prospects for a favorable resolution of the USMCA renegotiation do not appear good.

If I go, there will be trouble

0

-20

2022

JPMORGAN

2026

Despite the strong job growth, other details suggest that the

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