07:10 AM EDT, 08/08/2025 (MT Newswires) -- The Canadian economy may be resilient but it's still barely showing a pulse despite moderate tax relief, the "Buy Canada" and "Travel within Canada" craze, and the prior aggressive interest rate cuts engineered by the Bank of Canada, said Rosenberg Research.

Real gross domestic product shrank by a modest 0.1% month over month in May, and that was the third mild contraction in the past four months and took the year-over-year trend growth down to 1.2% from 1.5% a year ago and +1.7% two years ago.

"Slowing and anemic, to be generous," stated Rosenberg Research.

Even with Statistics Canada's estimate that real GDP rebounded by 0.1% month over month in June, that would still leave the level of real economic activity essentially the same as where it was at the turn of the year. Retail trade, air travel, manufacturing, and construction remain fundamentally weak.

While the immigration boom is over, the reality is that the 1.2% year-over-year growth in real GDP benchmarked against a 2.3% population growth (was +3.6% a year ago) leaves the pace of economic activity in per capita terms still declining at more than a 1% annual rate, it pointed out.

That is the "Canadian" definition of "resilience." That is a sad state of affairs, added Rosenberg.

One reason why there are so many smiling faces at Bay Street economics departments is because of the ripping employment data Canada has been seeing of late in the Labour Force Survey (LFS). This flies in the face of the dour mood the business sector is in, underscored by the most recent BoC survey of the firms, according to Rosenberg.

The outlook for sales and hiring is hardly constructive. And what received very little attention was last week's release of Canada's payroll (Survey of Employment, Payrolls, and Hours, or SEPH) survey, which portrayed a completely different labor market picture than the rival household (LFS) data. There were only +15K jobs created in May as per the SEPH data, and that left employment running nearly flat on a YoY basis compared to the household survey's pace of +1.4% (for May).

Then tack on the fact that job openings dropped by 20,000 in May, and have declined now in each of the past six months to stand at the lowest level seen since 2017. The job vacancy rate -- he number of job openings relative to total employment -- has shrunk from 2.9% in March to 2.8% in April to 2.7% as of May -- and is also at an eight-year low.

As a consequnce, labor demand in Canada is on a visible downtrend and across a broad front, which is exerting downward pressure on wage trends. That, in turn, means that this recent upturn in the inflation data will hit a wall in the ever-loosening labor market.

Canada's central bank isn't likely to stay on the sidelines much longer and the Canadian dollar remains at downside risk.