RBC Says Canada Data Lull Shifts Focus to U.S. Payrolls and BoC Outlook

06:14 AM EDT, 09/29/2025 (MT Newswires) -- A quiet week for Canadian economic data will keep attention on the U.S. labor market, with Friday's payrolls report in focus, RBC said.

The U.S. release is scheduled for Friday but could be delayed if a government shutdown begins Wednesday, the bank said.

Canada's own monthly labor force survey will follow a week later. While Canada has largely avoided direct U.S. tariffs under the CUSMA trade pact, it remains exposed to spillover from a contracting U.S. industrial sector because of tightly linked supply chains, RBC said.

The Canadian economic backdrop has already softened, with a 1.6% decline in gross domestic product in Q2 and a rise in the unemployment rate over the summer, prompting the Bank of Canada to cut interest rates in September. Still, early Q3 economic indicators have looked better, including a 0.2% rebound in July GDP alongside higher manufacturing production, pointed out the bank.

The uncertain trade environment has made the BoC highly data-dependent, added RBC. Following September rate cuts from both the BoC and the Federal Reserve, policymakers will be watching closely for additional signs of economic softening as they weigh their next decisions on Oct. 29.

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