In this week’s The Seven… 

• Tariff fatigue - Canadian jobs machine running on empty
• More balanced - Alberta’s housing market
• June jump - Oil production in Alberta
• Stuck in a rut - Canadian labour productivity
• Mixed crop news - Better growing conditions, lower prices, and trade headwinds
• Next week - Our September economic outlook
• Interesting Fact: The Father of the Green Revolution.
• Chart of the Week: Marching towards 10 billion people 

“Hey, hey, hey

Ba-dee-ya, say, do you remember?

Ba-dee-ya, dancin' in September

Ba-dee-ya, never was a cloudy day”

“September” by Earth, Wind and Fire

Most of my interactions this week started with - where did the summer go? Leaves are turning and the kids are back in school. If it seems especially youthful out there it’s probably because of the influx of young migrants arriving in Alberta the last three years.

We’re in the thick of the trade war, and conditions are still pretty uncertain. There is still no trade deal with the U.S. and, closer to home, we’re waiting on new project announcements from the federal government after the Major Projects Office headquartered in Calgary was announced last week.

Data has trickled in over the summer, shedding light on how the economy is responding to the trade turmoil. We’re seeing the damage on the labour market (more jobs losses in August) and GDP (contracting in Q2). You may not feel like dancing to the economic data coming out this month, but give it some time. We expect conditions to improve later this year and into next year.

Employment declines, as trade war takes a toll

Another tough jobs report this morning from Statistics Canada.

The Canadian economy shed 66,000 jobs in August, fairly widespread across industries and extending the decline of 41,000 jobs in July.

The unemployment rate rose by 0.2 percentage points to 7.1%, the highest level (outside the pandemic period) since 2016.

It’s tough to find much silver lining in this report, but one could point to the fact that full-time jobs were largely unchanged. The decline in employment was concentrated in part-time positions (-60,000).

Taking the longer view, it is not surprising that the manufacturing sector has borne the brunt of the job losses since the start of the trade war, with employment in that sector down 3.1% since January.

South of the border, President Trump will not be happy with the August U.S. jobs report. This comes after disappointing July jobs data led to Trump’s firing of the Bureau of Labor Statistics commissioner. An increase of just 22,000 payroll jobs in August, far below expectations, and the unemployment rate up to 4.3%, the highest level since late 2021. Additionally, the report included downward revisions to previous months, with the combined number of jobs added in June and July revised down by 21,000.  

In Alberta, the labour market also lost jobs for the second straight month, with employment dipping 14,000 in August. Losses were concentrated in the manufacturing sector, which returned to March levels after increases in the previous four months. All the August losses were in part-time positions (-23,700), partly offset by full-time gains (+9,600).

The job spike in June has now been fully reversed, and employment now sits close to January levels.

The main takeaway is that the labour market is struggling to keep pace with the influx of job seekers. Alberta is still seeing rapid (albeit slowing) population growth. At the same time, economic conditions have softened in a difficult trade environment.

Here’s an example of what I mean. Over the past 12 months, employment is up 1.7%, ahead of the 1% national increase. But Alberta’s 15+ population (+3.2%) and labour force (+2.6%) have grown even faster. The end result is that the unemployment rate jumped to 8.4% last month (up from 7.6% the same time last year), to the highest level outside the pandemic period since 2017.

Forecast implications

Our expectation was that the labour market would soften in the second and third quarter, before improving into next year as trade conditions stabilize. However, the last two reports have come in weaker than expected. We now expect the Alberta unemployment rate to average around 7.5% this year (up from our June call of 7.3%), and stay elevated above 7% next year.  Annual Alberta employment growth of 2% is expected this year (consistent with our last forecast) even with jobs staying flat the rest of the year, entirely due to a strong hand-off from last year.

Bank of Canada should cut in September

We were already leaning in this direction, but this report strengthens our call for a September rate cut. GDP contracted in Q2, and the labour market has cooled significantly. As for inflation, it’s been below 2% for four straight months. Yes, I know core inflation is much higher, but ATB Economics’ view is that there will be a downdraft from shelter costs and, more recently, the removal of countertariffs and continued slack in the labour market that will cool wage pressures. There is still one more CPI reading before the September 17 announcement, but the recent data supports a 25-basis point cut in our view.

Either way, we think the Bank of Canada is almost done cutting (we expect two more cuts this year and then holding). With monetary policy running its course, attention is turning to execution on major projects. The Canadian economy could use a jolt right about now.

Rebalancing - A cooldown in Calgary pushes home inventories higher

Changes are afoot in Alberta’s housing market.

Market conditions are much more ‘balanced’ based on two measures we track closely.

1. The sales-to-new-listings ratio is now at 60 (as of July), the lower end of seller’s territory. That’s still higher than Canada’s 52, but it's a climb down from an average of 74 last year.

2. Months supply of inventory has approached 3. Again, still tighter than national trends, but also supporting the rebalancing theme.

What’s going on? It’s a combination of weaker sales since the start of the year (ongoing trade uncertainty and perhaps people waiting for interest rates to bottom) and more supply coming onto the market.

All this has taken some heat off benchmark home prices, which were effectively flat (+0.4%) year-over-year in July vs. a 3.5% decline nationally.

Housing markets are regional, not national. But even zooming in on Alberta leaves out some important nuances inside the province. Much of the recent cooldown has come from Calgary. We observe tighter market conditions, based on sales-to-new-listings, and faster price growth in smaller markets like Grande Prairie, Lethbridge, Lloydminster, and Medicine Hat.   

Crop report - better conditions, but challenges remain

The latest provincial crop report points to better-than-average crop conditions in Alberta, and higher yields this year, though some parts of the province are still dealing with drought conditions.

Provincial crop conditions are rated 65% good to excellent, ahead of the 5-year average of 50%.

As for yields, the latest estimate is 18.6% higher dryland yield than the 5-year average, and 10.8% ahead of the 10-year average. The largest reported gains are central and southern Alberta  These results jive with model-based crop production estimates from Statistics Canada, showing expected increases for a variety of crops including wheat, canola, and barley.

Crop farmers, however, face adversity on other fronts.  First, Chinese tariffs have effectively blocked that market for canola, pork and peas. Second, major crop prices (canola, wheat and barley) are down so far this year compared to their five-year averages on the back of strong supply.

June jump - Oil production in Alberta

After some spring disruptions (maintenance and wildfires), oil production has rebounded in Alberta.  In July, it reached the highest it has ever been for that month at 4.3 million barrels per day. This beat July 2024’s output by over 300K per day.

The upward trend is also clear on a year-to-date basis. Over the first seven months of 2025, production averaged 4.1 million barrels per day compared to 3.9 over the same period in 2024 and 3.7 in 2023.

Expanded access to Asian markets via the expanded Trans Mountain Pipeline have facilitated the production growth, which remains a key driver of our Alberta export and GDP forecast this year and next. 

Interesting Fact: The Father of the Green Revolution

Norman Borlaug (1914-2009) was an American agronomist sometimes known as the "Father of the Green Revolution." He developed high-yield, disease-resistant wheat varieties that, when combined with modern farming techniques, dramatically increased food production in Mexico, India, and Pakistan. His work is credited with saving hundreds of millions of people from starvation. For his humanitarian efforts, he was awarded the Nobel Peace Prize in 1970.

Borlaug, along with William Voght, is profiled in Charles’ Mann’s book The Wizard and the Prophet, which I highly recommend!

Chart of the Week: 10 billion humans

Demographics can explain a lot - from what public services will be needed (schools or hospitals), to emerging consumer trends (jeans or cruises) and to how many homes need to be built. Noted Canadian demographer David Foot once claimed it could explain “two-thirds of everything.”

As someone in the forecasting business, I always come back to people. They are much easier to forecast than the economy or the markets. With people, you know how many there are today, and you can age them forward with a few assumptions along the way (fertility rates, lifespan and migration patterns).

Our Chart of the Week shows the shocking increase in the world’s population since WWII. According to the United Nations, the planet hosted 2.6 billion people in 1952. Today, we’re at 8.2 people. The latest ‘medium scenario’ by the United Nations forecasts we’ll hit the 10 billion mark by 2061, with growth concentrated in sub-Saharan Africa, India and Pakistan.

How will Canada meet the needs of a growing global population?

Answer to the previous trivia question: Started in 1875, the Canadian Pacific Railway was completed in 1885.

Today’s trivia question: There will be a full moon on Sunday. What is the September full moon often called?