Statistics Canada reports broad second-quarter rebound as late-summer employment weakens

Statistics Canada’s October 28 assessment says real GDP increased 0.8% in the second quarter of 2026, the strongest quarter-over-quarter gain since before the Canada-U.S. trade conflict began. Growth was broad-based, supported by higher export volumes, household and government consumption, and renewed business investment in residential and non-residential assets. The report also found that productivity and real GDP per capita posted their strongest quarterly advances in years. [1]

External trade was a major contributor to the expansion. Combined goods and services exports rose 3.6% in the second quarter, including a 4.9% increase in goods exports. Passenger-car and light-truck shipments led the rise after weaker auto production had constrained exports in late 2025 and early 2026; higher energy-product shipments, intermediate metals, consumer goods, and industrial machinery also added to export volumes. Total goods and services exports were 6.7% above their level a year earlier and exceeded their pre-trade-conflict level. [1]

The improved export position was reflected in Canada’s external accounts. Statistics Canada reported the first current-account surplus in four years in the second quarter, and said it was the largest surplus in more than two decades. Goods imports rose 0.6% during the quarter, driven in part by tires, vehicle engines and other vehicle parts, as well as chemical products and computers, while consumer-goods imports declined for a sixth consecutive quarter. These data point to a stronger trade contribution to growth, although the report does not attribute the improvement to a single policy or market factor. [1]

Labour-market data were less uniformly positive. Employment gains from May through July offset cumulative losses over the first four months of 2026, with increases concentrated among private-sector and core-aged workers and in full-time employment. The unemployment rate fell to 6.4% in July from a year-to-date high of 6.9% in April. That progress was interrupted by employment declines in August and September, concentrated among public-sector employees and youth, while the number of vacancies changed little. [1]

Inflation also remained elevated relative to early 2026, largely because energy prices rose after disruptions in the Strait of Hormuz associated with the U.S.-Iran military conflict. Headline consumer-price inflation reached 3.2% in May, eased to 2.8% in June and then stood at 3.0% in both July and August. Excluding gasoline, inflation held at 2.2% from May to July; higher grocery prices added pressure while slower shelter-price growth moderated the overall rate. [1]