Sean Donohue

• The soft start to the year for the Canadian economy appears broad-based, underpinning 2026 real GDP growth downgrades across provinces, particularly in Ontario, B.C. and parts of the Atlantic. The picture is better in per capita terms, with positive growth expected across all provinces this year, led by Newfoundland and Labrador.
• A rebound in employment in May offered a modest lift to labour markets after a soft first quarter, but data volatility continues to cloud the underlying trends. Population growth is slowing sharply, with outright declines in Ontario, Quebec, and B.C. leading to smaller labour forces. This should help cap increases in unemployment, even as hiring slows to a near-standstill.
• The U.S.-Iran conflict has lifted global energy prices, providing a meaningful revenue and income boost to oil- producing provinces—particularly Alberta and Newfoundland and Labrador. Prices are expected to moderate through the back half of the year as Middle East tensions ease, though the outlook is highly uncertain. Higher fuel costs are weighing on households and businesses, especially in Central Canada.
• Provincial budget season has wrapped up, with deficits and net debt (both as a share of GDP) set to rise in aggregate this year. While FY 2026/27 program spending is set to gear down across provinces, weighing on GDP, committed public capital spending plans remain an important source of support. New initiatives were targeted rather than transformative, including measures such as the removal of the PST on groceries in Manitoba and tax cuts for businesses and new home purchases in Ontario. 
• Canadian home sales in the second quarter are tracking broadly in line with our prior projection, led by Ontario, while price growth is somewhat stronger. We continue to expect a gradual recovery through next year, with modest improvements in Ontario and B.C. (supported by pent-up demand), partly offset by cooling activity in other regions amid scant population growth.
• The July 1 CUSMA review deadline is nearing, but timely renewal looks unlikely as talks have yet to pick up. Trade uncertainty remains elevated as the U.S. stays committed to tariffs. Ontario, Quebec, and B.C. are most exposed given their reliance on manufacturing and trade. Still, exemptions for CUSMA-compliant goods have left Canada facing relatively low effective tariff rates, helping support export recoveries in most provinces.

• 2026 tournament could add up to C$6.5 billion to Canada's quarterly GDP
• Tourism, hospitality and consumer spending expected to drive the majority of economic boost, contributing up to C$5 billion
• Incremental growth to lift quarterly GDP by approximately 0.1 percentage points in mid‑2026

As millions of fans turn their attention to North America for the world's largest international soccer tournament, an economic boost of up to C$6.5 billion is expected in incremental quarterly GDP for Canada according to a new report from BMO Economics.

Running from June 11 to July 19, the tournament will feature 48 teams and 104 matches across North America, with Toronto and Vancouver hosting games in Canada.

"Mega sporting events of this scale don't transform economies overnight, but they do create a meaningful surge in demand over a concentrated period," said Douglas Porter, Chief Economist, BMO. "In Canada, tourism, accommodation, food services and local entertainment stand to benefit most – particularly in the host cities."

The number of home sales recorded over Canadian MLS® Systems increased 5.5% on a month-over-month basis in May 2026.

“The national sales increase from April to May was broad-based but driven disproportionately by Ontario, suggesting the HST rebate on new builds may have only briefly drawn the attention of buyers away from the existing home market,” said Shaun Cathcart, CREA’s Senior Economist. “While it was just the first month in 2026 to see any meaningful upward momentum in headline demand, under the surface conditions have been improving for some time. Sellers’ and buyers’ expectations are increasingly aligned, as evidenced by tightening sale-to-list price ratios and shorter periods between listing and sale dates. As a result, prices have largely stabilized following some softness earlier in the year.”

May Highlights:

• National home sales jumped 5.5% month-over-month.
• Actual (not seasonally adjusted) monthly activity came in 5.1% below May 2025.
• The number of newly listed properties edged down 1% on a month-over-month basis.
• The MLS® Home Price Index (HPI) inched down by 0.1% month-over-month and was down 4.1% on a year-over-year basis.
• The actual (not seasonally adjusted) national average sale price was up 1.5% on a year-over-year basis in May 2026.