Other economic indicators
Keep abreast of key economic indicators.
American economy
Updated February 12, 2025
The U.S. economy just keeps on growing
The U.S. economy is still in good shape, with fourth-quarter growth reaching 2.3% meaning real GDP grew by 2.8% in 2024. This trend is set to continue into 2025 with first-quarter indicators pointing to growth of 2.9% for now. The policy changes proposed by the new administration should not substantially alter the trajectory of the economy or monetary policy, but risks of higher inflation due to tariffs could limit growth prospects. Inflation is still high with latest reading suggesting price increase of 3.0% in January relative to a year ago. The ongoing well performance of the economy and recent price surge suggests that rate cuts are unlikely this year.
The impact on your business
- Strong consumer spending will continue to drive growth in the US, which could boost demand for Canadian goods and services on the short term, even with the threats of tariffs looming.
- Canadian companies could benefit from increased demand for their exports. However, the potential increase in import tariffs could disrupt supply chains and raise costs.
- Uncertainty will temper gains that Canada would have typically enjoyed from such an economic outlook, but the future of trade is too uncertain for businesses to fully enjoy the spillover effect of U.S. growth. Cross-border projects will be halted.
Proven strategies
- If you're worried about tariffs, check out Canada Tariff Finder , a free online tool that enables Canadian exporters to find out the tariffs applicable to a specific product in a foreign market.
- If you're thinking of expanding your business outside of Canada or diversifying your market beyond the U.S.: 4 tips for successfully exporting your services
Oil market
Updated February 12, 2025
Crude oil prices continue to fluctuate
Economic uncertainty is still very much with us and its impact is being reflected on the oil market. Many economies are expected to experience stronger economic growth in 2025 than in 2024, but once again, the uncertainty would likely dampen the global economic outlook and could therefore temper global crude oil demand. Inventories are building up in the U.S. and OPEC and its allies have already announced that production restrictions will continue until at least spring 2025. Oil benchmarks continue to trend downwards, with Brent traded at about US$75 and WTI at US$72.
Crude oil prices continue to fluctuate wildly with no clear path ahead. If the economic situation turns out to be weaker than currently anticipated (particularly in China), and non-OPEC producers continue their production momentum, prices will fall even further.
The impact on your business
- Fluctuating oil prices can have a direct impact on the cost of transportation and logistics. Lower oil prices can reduce fuel costs, which in turn can lower the cost of producing goods and services.
- SMEs in energy-intensive sectors such as manufacturing and agriculture are more sensitive to movements in the oil market. If you operate in, or deal heavily with, these sectors, you may feel the impact of changes more quickly.
- High oil prices can reduce consumers' disposable income, leading to lower spending on non-essential goods and services. Lower prices at the pump can have a positive impact on SMEs in consumer discretionary sectors.
Proven strategies
- The price of energy products can be a determining factor in your cost structure. They also impact on consumers' budgets in general. A good cost management and pricing strategy can set you apart from your competitors.
Exchange rates
Updated February 12, 2025
The loonie is the first casualty of uncertainty
The Canadian dollar continues to lose feathers in the first quarter of the year. At the end of 2024, the loonie was trading at 70 US cents, but has since depreciated under the 70 US cents mark. This recent weakness of the Canadian dollar against the greenback has accelerated with threats of tariffs as these could hurt the Canadian economy. Moreover, the spread between U.S. Federal Reserve and Bank of Canada interest rates has widened at the end of January, which also lowers the loonie's value against the greenback. The Canadian dollar will continue to feel the heat of the uncertainty as demand shift toward sage-heaven assets such as the USD. The CAD should remain between US$0.68 and US$0.70 in Q1-2025.
The impact on your business
- In general, the Canadian dollar's impact on SMEs will depend on the nature of your business and its dependence on imports versus exports.
- A weak Canadian dollar supports exports. If, on the other hand, you are importing inputs or machinery, your operating costs could rise in the coming months.
Proven strategies
- It's important for SMEs to manage currency risks and consider strategies to mitigate potential negative effects. Find out how to manage foreign exchange risk when selling abroad.
Interest rates
Updated February 12, 2025
Further cut to start the year
In its January 29 announcement, the Canadian central bank's Board of Governors opted for a yet another standard 25 basis points. The January announcement reflects a degree of confidence in the resilience of the Canadian economy on the part of the Bank of Canada. Inflation remains subdued in Canada, which should prompt the Bank of Canada to continue easing credit conditions in the country but it will most likely adopt a wait and see mode giving the current economic context.
The key rate stands at 3.0%, having accumulated 200 points of cuts since June 2024. Effective rates for households have fallen by 82 points since June, and those for businesses by 149 points. Starting January 30, Canada's deposit rate will be slightly below the main policy rate, and the Bank of Canada is stopping its quantitative tightening. These moves aim to make monetary policy more effective.
The impact on your business
- Interest rate cuts have improved household and business financial ground, which bodes well for the economy as a whole.
- However, businesses need to remain patient because the economic recovery will be gradual as the soft landing continues and turbulences increase.
Proven strategies
- Keep a close eye on interest rates to optimize your company's financial situation. The commercial loan calculator will help you determine the interest associated with your loan.
- With rates still trending downwards, it's a good time to plan your future investment projects. Use our financial tools to calculate your company's debt-to-equity ratio, as well as other important ratios that banks take into account when evaluating loan applications.
Residential market
Updated February 12, 2025
A slow winter, ahead of a booming spring?
Activity has started to pick up in the residential resale market, with the number of transactions recorded at the end of 2024 reaching its highest level since April 2022 (following the announcement of the first rate hike by the Bank of Canada). Rate cuts are already beginning to have an impact on the market, with home sales jumping by 12.0% between December 2024 and 2023. Average home prices have also risen, albeit modestly for the time being (+2.6% compared to a year ago).
The impact on your business
- Companies operating in the residential, construction and furniture sectors will be among the first to feel stronger demand caused by lower interest rates.
- Even if your company is not directly dependent on the residential sector, trends in this market have consequences for all businesses. For one thing, housing is consumers' biggest budget item. What's more, according to a survey by KPMG Canada, business leaders see housing affordability as the greatest risk to the economy. The affordability issue weighs heavily on executives as they strive to attract and retain the staff they need for their operations.
Proven strategies
SME confidence
Updated February 12, 2025
Turnaround in business confidence
Optimism among Canadian businesses decreased again in January. The CFIB business confidence index for the year ahead started to head down again in December after the important rise of November.This took it to 54.6 in January, the lowest level in the last ten months. An indicator of 50 means that as many business leaders expect the business environment to deteriorate as to improve over the period covered.
The index therefore seems to confirm that a wind of pessimism blew through Canadian businesses this winter, despite the interest rate cuts. Given the high level of uncertainty hanging over the heads of Canadian businesses, confidence is set to drop, furthermore, in the coming weeks.
The impact on your business
- Business confidence plays a crucial role in shaping the strategic decisions and growth potential of SMEs. When business confidence is high, SMEs are more likely to invest in new projects, technology and hiring.
- It is important for SMEs to monitor economic indicators in order to make informed decisions.
Proven strategies
- Knowing tthat pessimism seems to be returning among Canadian companies, make sure you too have a strategy aligned with the external environment, so you don't find yourself at the back of the pack. Plan your strategy accordingly.