Author: Consultant

The end of the consumer carbon price at the start of April drove inflation down sharply, Statistics Canada said Tuesday, but there were signs of pressure building at the grocery store.

The annual pace of inflation cooled to 1.7 per cent last month, down from 2.3 per cent in March, the agency said. That’s a little higher than the 1.6 per cent expected by a poll of economists.

But with a Bank of Canada interest rate decision set for early June, market odds flipped in favour of another rate hold from the central bank in response to the inflation data.

How today’s hotter-than-expected inflation report has shifted market bets and economist views for future BoC rate cuts

Canadians were primarily finding relief at the gas pumps in April.

Statistics Canada said gas prices fell 18.1 per cent year-over-year in April, thanks mostly to the end of the carbon price, but also because global oil prices fell amid declining demand and higher production from OPEC countries. Natural gas prices also fell 14.1 per cent annually in the month.

Excluding energy from the consumer price index, StatCan said inflation would have come in at 2.9 per cent for April – an increase from 2.5 per cent for the same calculation in March.

The only province that didn’t experience a slowdown in inflation last month was Quebec, a province that has its own cap-and-trade system and therefore didn’t benefit from the end of the federal carbon price regime.

But while consumers found it cheaper to gas up in April, pressure was building at the grocery store.

Prices for food bought from the store rose 3.8 per cent last month, StatCan said, accelerating from 3.2 per cent in March.

On an annual basis, prices for fresh vegetables rose 3.7 per cent, the cost of fresh and frozen beef was up 16.2 per cent and prices of coffee and tea rose 13.4 per cent, the agency said.

Grocery store inflation has now outpaced the overall consumer price index for three months in a row.

Canadian travellers also felt the pinch as travel tour prices rose 3.7 per cent monthly in April, reversing course after a decline of eight per cent in March.

The April inflation figures come a little more than two weeks before the Bank of Canada is set to make its next interest rate decision on June 4.

The central bank held its policy rate steady at 2.75 per cent last month, saying then that it needed more time to see how Canada’s trade war with the United States was impacting the economy.

Financial market odds of an interest-rate cut in June fell to just under 40 per cent Tuesday morning, compared with roughly 64 per cent at the end of last week, according to LSEG Data & Analytics.

While the headline inflation figures showed signs of easing in April, the Bank of Canada’s preferred measures of core inflation, which strip out influences like the end of the carbon price, accelerated to top three per cent in the month.

CIBC senior economist Andrew Grantham said in a note to clients Tuesday that the central bank will be watching that trend carefully, alongside indications that the tariff dispute was starting to bite Canada’s labour market.

StatCan reported earlier this month that the national unemployment rate rose to 6.9 per cent in April as the trade-sensitive manufacturing sector took a hit.

“Signs of renewed weakening in the economy on one hand, as shown by the latest employment data, but stronger core inflation on the other makes for a tough decision for the Bank of Canada at its early June meeting,” Grantham said.

TD Bank senior economist Andrew Hencic said in a note that signs of a resurgence in core inflation might mean that the tariff hit could be showing up sooner than anticipated in the price data.

Like Grantham, Hencic said the April inflation report “complicates” the Bank of Canada’s decision making.

The central bank typically raises its policy rate to tamp down price pressures and lowers it to encourage economic growth; policy-makers have made clear they can’t effectively lean against both a slowing economy and a resurgence in inflation at the same time in a trade war.

Hencic said TD sees two additional interest rate cuts from the Bank of Canada this year.

Canada Post says it has received strike notices from the union representing 55,000 postal workers.

The Crown corporation says the notices state that employees plan to hit the picket line starting Friday at midnight.

• The index of consumer sentiment dropped to 50.8, down from 52.2 in April and hitting its second-lowest reading on record.
• The majority of the survey was completed before the U.S. and China announced a 90-day pause on most tariffs between the two countries.
• The trade situation appears to be a key factor weighing on consumer sentiment.

https://www.cnbc.com/2025/05/16/consumer-sentiment-may-inflation-expectations-tariffs.html

Japan’s Honda Motor HMC-N forecast a 59-per-cent profit decrease in the current financial year and said it would put on hold a plan to build an EV supply chain in Canada, amid the uncertainty stemming from U.S. President Donald Trump’s tariffs.

 
Japan’s second-biggest automaker expects operating income to total 500 billion yen (US$3.38-billion) in the year to March 31, 2026, versus 1.21 trillion yen in the year that just ended.

 
Honda’s forecast is the latest signal of the difficulty car makers are having navigating Trump’s tariffs on foreign-made automobiles at the same time the industry is being hit by the rise of Chinese EV producers.

 
Honda also said it would put on hold for “approximately two years” a plan announced in April, 2024 to build an EV supply chain in Ontario, Canada. That decision was taken due to the current slowdown in EV demand, it said.

 
Talks between Honda and Nissan to merge broke off earlier this year, although the two still have an agreement to co-operate on technology. Such tie-ups are seen as increasingly important for automakers to counter the threat from fast-moving EV companies, particularly in China.

The Nova Scotia government made waves earlier this year when it introduced legislation that would remove red tape on out-of-province goods and make it easier for Canadians from other jurisdictions to work there.

But the province quickly learned the limits to its ambitions on labour mobility when professional bodies warned that the legislation would lead to a lack of oversight.

Nova Scotia ultimately abandoned its initial plan to allow service providers to work in the province without getting relicensed. The pivot demonstrates some of the potential challenges Canada could face as Prime Minister Mark Carney vows to dismantle interprovincial barriers and introduce similar legislation at the federal level in response to the trade war launched by U.S. President Donald Trump.

Some professional bodies in the province have argued that labour mobility wasn’t a pressing problem in the first place. Alec Stratford, the head of the Nova Scotia College of Social Workers, said internal free-trade laws seem more “performative” than substantive in the face of economic uncertainty.

“In the case of social work, I‘m not sure what anyone is talking about when they say we need greater labour mobility, because it’s a problem that we’ve been working on and have virtually solved,” Mr. Stratford said.

The bill introduced by Premier Tim Houston sought to allow Canadians licensed in other provinces, such as a teacher from Alberta or an engineer from Ontario, to work in Nova Scotia without having to undergo additional licensing, so long as their home province took similar steps to remove red tape.

It was the first legislation of its kind in the country, earning Mr. Houston praise for taking a sweeping step to knock down interprovincial trade barriers.

However, professional licensing bodies in Nova Scotia warned the government that the legislation would remove their authority to regulate workers who relocate to the province, meaning they wouldn’t be able to investigate and resolve any complaints against those service providers. Meanwhile, regulators in the workers’ home provinces likely would not have jurisdiction over what happens in Nova Scotia.

Ottawa agrees with provinces to act fast to topple internal trade barriers

Pal Mann, head of Engineers Nova Scotia, said regulators such as the one he represents were worried the legislation would open up a “big, fuzzy grey zone that created a risk to the public.”

The feedback prompted the government to amend its legislation, which passed in late March, so that it reinstated the requirement to be licensed in Nova Scotia but stipulated that bodies must approve eligible applicants within 10 business days.

Otherwise, not much has changed: Workers in regulated industries will continue to pay annual fees and follow the rules outlined by regulators.

Mr. Stratford said the amendments generally addressed the concerns raised by regulators. However, he said the law could potentially lower the standards for becoming a social worker in Nova Scotia, noting that Alberta only requires a diploma to become a social worker, while other provinces require a bachelor’s degree.

As for the timeline outlined in the legislation for approving licences for eligible applicants, Mr. Mann and Mr. Stratford both said their organizations have faster processing times than outlined in the new law.

Nova Scotia‘s new legislation is part of a broader push in Canada to unify the economy and increase domestic growth by boosting internal trade.

Mr. Carney has made removing interprovincial barriers a key objective of his government, frequently arguing that Canada needs one economy, not 13 for each province and territory. Ontario and Prince Edward Island are pursuing legislation similar to Nova Scotia‘s, and Mr. Carney has promised to bring forward legislation that would lift all federal barriers to trade between provinces and territories by July 1.

But from the perspective of professional bodies in Nova Scotia, it’s unclear what problem the provincial legislation was intended to address in the first place when it comes to labour mobility, and the amended bill hasn’t changed how the bodies operate.

Provinces are vowing to eliminate trade barriers. How much could it save you?

“I don’t think it was really a problem, regardless of the sound bites that were happening at the national political level of how it’s hard for an engineer to move from one jurisdiction to another,” Mr. Mann said.

Mr. Stratford shares a similar perspective, noting that said barriers to labour mobility had already been addressed by the Canadian free-trade agreement.

The CFTA, signed by the federal, provincial and territorial governments in 2017, ensures that workers have the right to be relicensed in other jurisdictions.

The agreement, which seeks to facilitate trade and labour mobility within Canada, stipulates that workers certified by a regulator should be certified by the equivalent regulator in another jurisdiction “without any requirement for any material additional training, experience, examinations or assessments as part of that certification procedure.”

However, the agreement still allows a regulator to impose additional training or requirements on a worker coming from another province with different academic credentials or education if the regulator can prove it leads to a skills deficiency.

A spokesperson for the Nova Scotia government said changes made to the legislation were the result of “listening to regulators and stakeholders.”

“We must resolve barriers to interprovincial trade and labour mobility, and mutual recognition helps promote dialogue and harmonization among provincial regulators that upholds high standards,” Monica Maclean said in a statement.

Shopify’s (SHOP-T +14.92%increase) stock surged more than 13 per cent in Monday morning trading after the Nasdaq stock exchange announced the e-commerce company would join its 100 Index on May 19.

The tech-heavy benchmark tracks the 100 largest non-financial companies listed on the Nasdaq exchange.

Shopify’s inclusion is expected to increase institutional investment in the company, as index-tracking funds must adjust their holdings to include Shopify.

“We think it’s positive in that it should increase the demand and liquidity [because] a wider range of funds tracking that index would need to buy shares. Beyond that, we think it also elevates the company’s profile with investors,” said National Bank analyst Richard Tse in an e-mail.

Shopify posts strong first-quarter revenue growth, but outlook lags expectations

In a note to investors Monday, Royal Bank of Canada analyst Paul Treiber said the inclusion was likely to result in greater liquidity in the shares, and may result in a share price premium relative to peers which are not included in the index.

The Canadian e-commerce business will maintain its dual listing on the Toronto Stock Exchange.

In February, Shopify named a new U.S. executive office in securities filings for the first time and made several changes to its reporting format, suggesting it was positioning its shares to be included in major U.S. stock indexes.

And at the end of March, the company transferred its U.S. stock listing from the New York Stock Exchange to the Nasdaq Global Select Market, saying it was doing so in order to more closely align itself with its software peers.

Shopify will replace computer program and database company MongoDB on the exchange.

Canadian companies shift focus to Europe for exports, growth

This U.S. shift comes during a period of heightened political and market attention on Canadian companies, as the country faces continued trade threats from the United States.

However, last week Shopify reported a 26-per-cent revenue jump in its first-quarter earnings, and the company’s results quelled investor fears about immediate impacts resulting from U.S. President Donald Trump’s tariffs and the removal of the de minimis exemption for China. The exemption allowed for the duty-free import of goods up to a value of US$800.

“The consensus view has been that the tariffs (macro) would have the company pausing or moderating growth expectations; yet, the outlook and commentary pointed to continued growth momentum,” said Mr. Tse in a note to investors last week

The United States and China announced Monday they were massively rolling back tariffs on each other’s goods for 90 days, after trade talks in Geneva over the weekend.

The United States and China said they have agreed a deal to slash reciprocal tariffs as Washington and Beijing seek to end a trade war that has disrupted the global economy and set financial markets on edge.

Reuters

The breakthrough follows months of ratcheting up economic tensions between the world’s two largest economies, since U.S. President Donald Trump returned to office and launched an all-out trade war against almost all of Washington’s partners and rivals.

In a rare joint statement, the two governments said U.S. tariffs on Chinese goods would be reduced from 145 per cent to 30, while China would cut its levies on U.S. imports from 125 per cent to 10. The reductions will take place by May 14 and last “for an initial period of 90 days.”

“After taking the aforementioned actions, the parties will establish a mechanism to continue discussions about economic and trade relations,” the joint statement said, adding this dialogue would be led by Chinese Vice Premier He Lifeng, U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer.

Speaking in Geneva, Mr. Bessent said “we both have an interest in balanced trade, the U.S. will continue moving toward that.”

“We have a very good mechanism to avoid unfortunate escalations happening again,” Mr. Bessent said, adding the “consensus from both delegations is that neither side wanted a decoupling.”

Both economies have begun to feel the strain of reduced exports and severely higher prices as a result of reciprocal tariffs, and concerns over disruption to the bilateral relationship have contributed to chaos in the U.S. stock and treasury markets.

Facing growing criticism, Mr. Trump last month said he was open to a trade deal, which he said could happen “pretty quickly,” promising not to “play hardball” during negotiations with China.

“They’re gonna do very well, and I think they’re going to be happy, and we’re gonna live together very happily and ideally work together,” he said.

On April 2, Mr. Trump announced a raft of “Liberation Day” tariffs against almost every country in the world, with levies apparently decided based on a calculation derived from a target’s trade deficit with the U.S., though countries with a trade surplus and even uninhabited territories were not spared.

After markets plummeted and a global recession loomed, Mr. Trump backtracked, announcing a 90-day pause, which is still in effect. He has since been negotiating individual trade deals with many countries, with the most comprehensive struck last week with Britain.

Speaking to reporters Friday, Mr. Trump dismissed criticism of his approach.

“I think the tariffs are going to be the greatest thing we’ve ever done as a country,” he said. “It’s going to make our country rich again.”

With files from Alexandra Li in Beijing and Reuters

Monday May 12

China releases inflation data for April

2 pm ET: U.S. budget balance for April

Earnings include: Constellation Software Inc.; Denison Mines Corp.; Dentalcorp Holdings Ltd.; Exchange Income Corp.; Finning International Inc.; Hudbay Minerals Inc.; K92 Mining Inc.; Mag Silver Corp.; Simon Property Group Inc.

–

Tuesday May 13

Germany releases business conditions survey. UK releases payrolls data

Canadian federal cabinet announced

6 am ET: U.S. NFIB small business economic trends survey

830 at ET: U.S. consumer prices for April. Consensus is for a 0.3% monthly increase, or 2.4% year over year. Excluding food and energy, a monthly increase of 0.3% is also expected

Earnings include: Aya Gold & Silver Inc.; CAE Inc.; Endeavour Silver Corp.; Freehold Royalties Ltd.; Innergex Renewable Energy Inc.; Keyera Corp.; Northland Power Inc.; Peyto Exploration & Development Corp.; Power Corp. of Canada; Wesdome Gold Mines Ltd.

–

Wednesday May 14

Germany releases CPI data for April

830 am ET: Canada building permits for March

830 am ET: Canada new motor vehicle sales for March

Earnings include: Birchliff Energy Ltd.; Boralex Inc.; Cisco Systems Inc.; H&R REIT; Northwest Healthcare Properties REIT; Stantec Inc.

–

Thursday May 15

Euro area and UK releases first quarter GDP data and March industrial production

815 am ET: Canadian housing starts for April. BMO expects a 5% increase to an annualized rate of 225,000

830 am ET: Canadian manufacturing sales and new orders for March. BMO forecasts a decline of 1.9% and 2.5%, respectively

830 am ET: Canadian wholesale trade for March. A decline of 0.3% is forecast

830 am ET: Initial U.S. weekly jobless claims

830 am ET: U.S. retail sales for April. BMO expects a rise of 0.1%

830 am ET: U.S. PPI final demand for April. A rise of 2.6% is expected from a year earlier

840 am ET: U.S. Fed Chair Jerome Powell speaks on “framework review” in Washington, DC

9 am ET: Canadian existing home sales for April. A decline of 11.5% is expected from a year earlier, with average selling prices down 4%. The MLS home price index is also expected, with a 3% year over year drop forecast

915 am ET: U.S. industrial production for April

10 am ET: NAHB housing market index and U.S. business inventories

Ontario budget released

Earnings include: Alibaba ADR; Canada Goose Holdings Inc.; Deere & Co.; InterRent REIT; Merck ADR; South Bow Corp.; Walmart Inc.

–

Friday May 16

China releases GDP data for first quarter and industrial production for March

Euro area releases trade surplus for March

European commission spring economic forecasts released

830 am ET: International securities transactions for Canada for March

830 am ET: U.S. housing starts and building permits for April

830 am ET: U.S. import prices for April. Consensus is for a decline of 0.4% year over year

10 am ET: University of Michigan consumer sentiment survey

1030 am ET: BoC senior loan officer survey

No earnings of note

Oil sands producer Suncor Energy Inc. has reported quarterly production and refining records, despite Alberta’s February deep freeze and an uncertain global economic environment.

Production for the Calgary-based oil giant hit 853,000 barrels a day in the first quarter of 2025 – the company’s highest-ever first quarter and the second-highest quarter in its history, chief executive officer Rich Kruger told analysts on an earnings call Wednesday.

Suncor’s net earnings for the first three months of 2025 were $1.69-billion, or $1.36 per share, up from $1.61-billion or $1.25 per share in the same period last year. Gross revenues were $13.33-billion, up from $13.31-billion.

Refining throughput was 483,000 barrels a day, “far and away the highest first quarter in our history,” Mr. Kruger said, with every refinery producing more than atthe same time last year. Refined product sales hit 605,000 barrels a day.

“The bottom line: One year into our three-year plan, we’ve exceeded every single target. We’ve essentially achieved two years of our planned improvements in the first year,” Mr. Kruger said.

“In 1954 a gentleman named Roger Bannister, the world’s first four-minute miler, said, ‘Records are meant to be broken.’ And that is exactly what Suncor teams continue to do.”

Like other oil sands producers, Suncor’s production slowed in February when Alberta was hit with a brutal, record-breaking cold snap. Mr. Kruger said the key to avoiding a complete slowdown is learning from past winters and making sure equipment is resilient – whether it’s the fuel in haul trucks or the winterization of refineries.

“The last time I checked, it’s always cold in Canada in the first quarter,” he said.

“We face this uncertainty, this variability, every year. The last two years, we have been very focused on, ‘How do we engineer or design out the risk of that variability?’”

Amid strong production, Suncor continues to assess its 1,800 Petro-Canada gas stations. It is upgrading those in major markets with the highest margins and selling those on the other end of the spectrum, with the goal of transforming 20 per cent of its network by the end of 2026.

The company’s retail portfolio was a point of contention for activist investor Elliott Investment Management LP, which in 2022 pushed for a shakeup of Suncor and launched a campaign to oust several directors and explore a sale of the Petro-Canada chain.

Then-CEO Mark Little resigned, and Mr. Kruger took the reins of the company in 2023. People close to Elliott in 2024 said the fund was pleased with the improvement in Suncor’s fiscal fortunes under the new CEO and happy to let the retail strategy play out.

Asked how Suncor views its Petro-Canada assets these days, Mr. Kruger said Wednesday, “The only thing I unconditionally love are my kids and my grandkids. Everybody else has to earn their seat at the table.”

That doesn’t mean he’s keen to sell off the gas stations.

“I never say never, but right now that is a very, very valuable part of the company’s operations,” he said.

“We look at all of our assets for their ongoing contribution and their value to us,” and the sites are a boon, he said, allowingSuncor to integrate its operations all the way from production to sales.

Suncor’s retail volumes were up 6 per cent in the first quarter, and its truck stop business was up 9 per cent.

But even with record throughput at refineries, the company’s exports were down 25 per cent in the quarter. Mr. Kruger said keeping more products in the domestic market played a big role in driving margin improvement.

Menno Hulshof, with TD Cowan Equity Research, wrote in a note Wednesday that the first-quarter results continued Suncor’s “trend of outperformance,” despite the February cold snap. He added that the company’s 2025 production guidance is likely conservative and should slowly increase to capture its new normal.

“Given a much improved cost structure, strong balance sheet” and significant operational momentum, Mr. Hulshof wrote, Suncor is likely well-positioned to weather the current market volatility.