In this week’s The Seven… 

• Thankful for…a better jobs report 
• Thanksgiving dinner table topics - economics edition
• It’s all relative - loonie not as strong as you think
• Interesting Fact: What is stablecoin?
• Chart of the Week: Why Canada needs to “build, baby, build”
• Happy Thanksgiving (no Twenty-Four on Monday)

"If all the economists were laid end to end, they'd never reach a conclusion."

-George Bernard Shaw

Shaw’s playful quote is a witty jab at the field of economics for its frequent disagreements. In contemplating Shaw’s quote, I’m also reminded of some wise advice from a former boss - ‘get to the point’ and ‘lead with the lead’.

Challenge accepted.  

My conclusion, even after today’s surprisingly good jobs report, is that Canada needs to build and bring back business investment. I’m not alone - it’s a view shared by other Canadian economists and the topic in our Chart of the Week.

So perhaps economists can reach the same conclusions after all?

This week was light on the data front, but we did get a jobs report this morning. We go there first.

That’s better - Employment swings back (thanks mainly to Alberta)

The Canadian labour market came back to life in September, with Alberta leading all provinces in job gains. 

Employment in Canada rose 60,400 in September, driven entirely by full-time positions.  However, that comes after a tough summer of job losses - the level of employment still remains below June levels.

This is better news for job seekers, but still not good enough to lower the unemployment rate. The jobless rate held at 7.1%, staying at the highest level since 2016 outside the pandemic period. 

In Alberta, employment spiked by 42,500, a mix of full-time and part-time jobs, and fully offsetting job losses over the summer. How big was this jump? It’s the largest one-month gain recorded outside the pandemic period.

Last month’s job gains were fairly broad-based across industries, with manufacturing (+7.9K), construction (+8.4K) leading the charge.

Recall that Alberta’s labour market needs to churn out jobs faster than other provinces to keep pace with its fast growing population. That has been challenging in recent months. However, the September jobs spike did the trick, putting a dent in the unemployment rate (7.8% in September vs. 8.4% in August).  

Here’s another way to make the ‘keeping up with the population’ point. Alberta has consistently outpaced the rest of the country in job growth since mid-2023 (see chart). It led all provinces in year-over-year job growth in September at +3.8%. Yet the unemployment rate remained above the national average. 

As we’ve noted, it's a tough labour market for youth, but even in that category there was relief last month. The youth unemployment rate eased to 14.7%. That’s still high, but it’s down from 20% in July.

My conclusion? An unquestionably healthier report than expected. But it’s only one month of data in a notoriously volatile survey. The underlying trend shows that slack has built in the Canadian labour market since the trade war, and one month of data doesn’t change this. For Alberta, this is much stronger than we were expecting. Our September forecast built in some improvement, but if this trend continues we’ll need to revise employment higher.

Implications for the Bank of Canada. This report takes pressure off the Bank of Canada to cut again on October 29. However, looking at the broader slowing trend, we still think there is at least one more cut coming this year. The deciding factor for October will be the September inflation report. A friendly CPI reading (especially in core inflation) would still leave the door open to another 25 bps rate cut this month.

Thanksgiving table topics - economics edition

At Thanksgiving dinner, the economy may come up. If so, that may mean the conversation has fizzled and it could be time to leave. But, if you choose to stick around, here are a few ATB economics conclusions you can draw from:

Canada’s economy has slowed due to trade turmoil. But it’s also dealing with longer-term issues like weak investment and productivity that pre-date Trump 2.0. Think of it as getting a cold, but with an already compromised immune system. Alberta will grow faster than other provinces, but it too is feeling the strain from the trade war.

Looking ahead, expect positive but sluggish growth for the remainder of 2025, with a gradual improvement in 2026 assuming no further escalation in the trade war. Despite the improvement, it will ‘feel’ slow - not necessarily a technical recession, but one that will feel like one for some.

What can we be thankful for?  It could be worse. Canada is getting exemptions on Canada-U.S.-Mexico Agreement (CUSMA) compliant goods. Further, there is an appetite in Canada to do more to improve the economy - knock down internal trade barriers, expand overseas, and get major projects built.

It’s all relative - the loonie is actually down this year, despite gaining against the greenback

How’s the Canadian dollar doing? Simple question, longer answer (sorry Shaw). 

The value of the loonie is relative - based on how we’re faring compared to others. It’s kind of like interprovincial migration - you don’t need to be doing great to attract migrants, just better than your neighbours. 

On the one hand, the Canadian dollar is faring OK compared to the U.S. dollar this year, having risen about 3% since the beginning of the year. But compared to other major currencies - the Yen, the Euro and Pound - it’s down. 

So it’s actually more that the U.S. dollar has weakened, not so much that the Canadian dollar is gaining favour. In the U.S., expectations of Fed Reserve rate cuts, fiscal concerns, policy/tariff uncertainty, and the so-called de-dolarization trend are contributing to broad-based U.S. dollar weakness. 

To help us sort this out, the Bank of Canada publishes an index of the overall value of the Canadian dollar, trade weighted against multiple currencies. It has hardly budged (-0.2% between Jan and Sept) this year against a basket of currencies. But excluding the US$, the value of the loonie is down 3.8% over this period.

What’s next? Our forecast is for the Canadian dollar to average US$ 0.735/CAD$ in 2026 and 0.755 in 2027.

A reminder  - the population is still aging

In our recent “magnet for youth” Twenty-Four, I made the point that migration slows, but does not reverse, population-aging. 

Migrants are young, but you need exceptionally high and persistent inflows to prevent the median age from rising. This is due to the sheer size of the baby boomer demographic cohort. 

Here’s another way of looking at it. The following chart shows annual population projections for Edmonton CMA, which I used in my presentation to the Urban Land Institute in Edmonton earlier this week. 

Population growth is expected to average about 30,000 residents per year between now and 2050 in Edmonton CMA, with a rising concentration in growth from those 55+. Edmonton is not unique in the aging department - a similar aging pattern is expected for Calgary CMA and the rest of Alberta.  

Interesting Fact: Stablecoin

A stablecoin is a type of cryptocurrency that is designed to maintain a stable value, typically by being pegged to a less volatile asset, most commonly a fiat currency like the US dollar or the Canadian dollar.

The purpose of a stablecoin is to combine the technological benefits of blockchain (such as fast, low-cost, and borderless transactions) with the price stability of traditional money, avoiding the extreme volatility seen in other cryptocurrencies like Bitcoin or Ethereum.

ATB Financial is one of the financial institutions playing a role in the development of a Canadian-dollar-backed stablecoin through a strategic partnership and investment in Tetra Digital Group.

Chart of the Week: Why Canada needs to “Build, baby, build”

Last week, the C.D. Howe Institute released a useful summary of Canada’s productivity woes, calling it a “four alarm” emergency. Then, noted Canadian economists Don Drummond and David Dodge, published a similar piece in the Globe and Mail. All this comes after Senior Deputy Governor of the Bank of Canada Carolyn Rogers sounded the “break the glass” alarm in 2024. 

Sounds like a consensus among the economics community - a push back to Shaw.

It echoes much of what we’ve said on these pages that much of the weakness is related to chronically low levels of business investment - from machinery and equipment to intellectual property.

As our Chart of the Week shows, consumer and government spending have been largely responsible for the growth in Canada’s real GDP per capita over the last decade and the previous two decades. Holding things back are two big categories 1) business investment and 2) exports. Both have declined over the last decades in per capita terms. 1) and 2) are related. It’s hard to get more 2) without more 1).

So “Build baby build” isn’t just a catchy slogan. It’s a necessity and will be key to turning around the Canadian economy. As we’ve argued, Canada does not so much have a GDP per capita problem as it does an investment per capita problem.  

The federal government appears to have at least got the diagnosis right on what ails the Canadian economy. Fixing it is much harder. The Building Canada Act promises to fast-track major projects, but we now wait for execution on these promises. 

Trade infrastructure will be critical. Transportation constraints not only limit exports to overseas destinations, they also lead to us selling products at a discount when global markets can’t be accessed (Edmontonians welcome the hometown discount McDavid just accepted, but I don’t think Canadians appreciate a price discount on our exports). 

So what’s the plan to deal with this?  Put two dates on your calendar. November 4 - federal budget day (funding envelopes for projects) and November 16 - Grey Cup (second tranche of projects announced).

Answer to the previous trivia question: True: Pumpkins were once (and maybe still are by some) recommended for removing freckles.

Today’s trivia question: The winner of the 2025 Nobel Memorial Prize in Economic Sciences is being announced on Monday, October 13. Who won last year?