BMO Says Canada's Labor Market Doesn't Point to Recession

08:01 AM EDT, 07/15/2025 (MT Newswires) -- While Canada's Labour Force Survey (LFS) of Friday wasn't quite as strong as the "rip-roaring" headline would suggest, it nevertheless represented a big step in the right direction, said Bank of Montreal (BMO).

Specifically, the pullback in the unemployment rate (down 0.1 ppt to 6.9%) is "very encouraging," noted the bank. During true recessions, it's rare to have the jobless rate retreat, even for a month.

This space would assert that the unemployment rate is likely the single most reliable figure in any monthly jobs release, stated BMO.

Looking at it from a wider lens, the growth in the number of unemployed Canadians has cooled to a 9% year-over-year pace. That's down from a peak rate of 25% year over year at various stages in 2024, when the economy was dealing with the full effect of the prior rate hikes, pointed out the bank.

Over the past 50 years and more, a fool-proof recessionary gauge has been any time the growth rate in unemployed has topped 25% year over year. Canada didn't quite clear that bar this time, and are now rapidly moving away from that metric. Now, if Canada could just get some clarity on the trade front with the United States, an all-clear signal could be sounded -- "sadly, not there yet," added BMO.

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