08:38 AM EDT, 08/11/2025 (MT Newswires) -- Canada has experienced a significant increase in its working-age population in recent years, largely driven by immigration, noted Commerzbank.

Immigration in Canada has declined significantly in recent months and has now returned to levels not that far away from those seen in the 2010s, wrote the bank in a note to clients.

This reduces the pressure to create jobs in the Canadian labor market somewhat, stated Commerzbank. However, one problem remains: job creation appears to be slowing in line with the lower growth in the working-age population.

In June, exceptionally high job creation was observed, which didn't align with the trend of previous months. Friday's Labour Force Survey (LFS) for July showed why this was an anomaly: rather than job growth, roughly 40,000 jobs were lost, and the participation rate declined. The unemployment rate remained unchanged only thanks to this decline -- although it remains one of the highest among G10 countries.

Despite the positive surprise in June, the trend in the Canadian labor market continues to point downwards, with an average of just around 4,500 jobs created per month over the last six months, pointed out the bank.

Friday's weak figures are likely to encourage the Bank of Canada to deliver at least one more interest rate cut of 25 basis points in the coming months, according to Commerzbank. In any case, the trade conflict with the U.S. is having a negative impact on almost all Canadian sentiment indicators, and growth is lagging behind expectations.

Consequently, the bank continues to expect the Canadian dollar (CAD or loonie) to struggle against almost all G10 currencies, gaining only against a weak US dollar (USD).