June data: wages rising and inflation low, but jobs and GDP down

On average, workers have regained some ground since the 2022 inflation spike, but the good times might be short-lived without action against job loss and falling GDP.

Key economic data released in June provided mix of good and bad news for Canadian workers.

On one hand, the data showed April average wage gains were ahead of inflation. But the data also shows unemployment rising and GDP contracting. That trend is not only bad news for workers losing an income today, it threatens other workers’ continued wage gains in the future.

Average workers’ earnings increases pull ahead of inflation

The average Canadian worker’s weekly earnings increased 4.4 per cent between April 2024 and April 2025, according to a Statistics Canada survey released June 26. Earnings changes result from lower wages, fewer hours or a combination of both.

The largest gains were by workers in information and culture, real estate and rentals, and the finance and insurance sectors. But earnings increases were not even or everywhere. The average worker in utilities, retailing and wholesale trade experienced a weekly earnings drop.

Price hikes were lower than the average weekly earnings increase. Inflation data released June 26 showed a 1.7 per cent increase in the Consumers Price Index from May 2024 to May 2024, the same rate as between April 2024 and April 2025.

Big hikes in housing costs have moderated as mortgage rates, asking rent and house purchase prices decline. But housing costs in May 2025 were still up 3.0 per cent from a year ago, significantly faster than general inflation. Grocery costs, up 3.4 per cent from a year ago, also continue to run ahead of the general CPI increase, threatening household budgets.

Gasoline prices are down from a year ago reflecting the carbon tax’s demise and crude prices falling from over $80 USD in May 2024 to about $60 USD in May 2025.

But jobs and GDP decline, centred in Ontario

The bad news for workers is rising unemployment, which hit 7.0 per cent nationally in May 2025, up from 6.3 per cent in May 2024, according to Statistics Canada’s Labour Force Survey released June 4.

Despite the rising national number, unemployment in four provinces either decreased or remained stable over the previous twelve months. Driving the national rate has been Ontario, where unemployment surged from 6.8 to 7.9 per cent, the largest increase among the provinces. Ontario job growth stalled in June 2024 and since then 183,000 jobs have disappeared. Perhaps it is “all happening here.”

Connected to the Ontario-centred jobs slowdown, Canada’s GDP is getting smaller. From a peak of $2.294 trillion in January, GDP fell to $2.292 trillion in April, according to Statistics Canada data released June 26. Statistics Canada has provided “advanced information” about May, expecting GDP to fall a further 0.1 per cent, or $2 billion, to $2.290 trillion.

An annual data release in early May showed in 2024 Ontario’s GDP grew second slowest among the provinces. However, monthly data releases do not include provincial information.

GDP decline is not even across industries. Service-producing sectors generally continued to grow but goods-producing sectors shrank. In May 2024, manufacturing contributed $211 billion to Canadian GDP but fell to $203 billion in May 2025, a drop of 3.7 per cent. In contrast, the finance and insurance sector rose from $166 billion in May 2024 to $172 billion in May 2025, an increase of 3.7 per cent.

What’s next?

Certainly the economy is stalled very likely data to be released in July will likely show more GDP and job losses, in turn threatening workers’ continued wage gains revenging inflation.

Politicians, particularly the premier of Ontario, will pin blame on Trump, but that claim is neither true nor will it change the situation. Nor will Mark Carney’s pipelines ride in to save the day in the short-term or in Ontario, where the problem is worst. Doug Ford’s botched Ring of Fire scheme is on the never-neverland timetable. The Canada-Ontario EV supply chain strategy has gone silent.

Lots of data shows housing inflation is decelerating, but it is still not below the general rate of CPI increase. Strong housing construction starts could create jobs and help secure sustained lower housing prices, improving household finances and consumer confidence. But investors and governments are mostly on the sidelines, generating the pretence of concern and activity, but actually biding their time until the opportunity of crisis rebuilds.

Urgent action to build housing is not being proposed for the list of “national interest” projects and the federal government did not use its spring Commons session to implement the housing legislation on which it had campaigned. The new prime minister did not intercede when his housing minister said housing prices should not go down.

So what’s left on the table in July are interest rates. Opinion is mixed on whether, at its July 30 meeting, the Bank of Canada will hold the policy rate at 2.75 per cent or cut it 0.25 percentage points. But with inaction everywhere else, easier credit may be the only significant July economic move with any effect in mitigating job losses and supporting continued wage gains.

Short of that, we wait.