Canada may stand out on the global economic surprise index, but it is for posting poor results, according to National Bank of Canada economists. The country's recent string of disappointing data has made it an underperformer on the world stage, particularly when compared with the United States.
Economic data disappoints
Economic data in Canada has stumbled out the gate so far in 2026, including year-to-date job losses and several employment misses relative to analyst expectations, National Bank of Canada said. Taylor Schleich and Ethan Currie noted in a note on Tuesday that disappointing economic data is not a global phenomenon right now. Canada stands out as an underperformer among major economies, especially against the United States.
New York-based Citigroup Inc. operates the economic surprise indexes, which measure data surprises against market expectations. A positive reading indicates numbers have come in ahead of expectations, while a negative reading means they have missed expectations. On Tuesday, Canada's index was at minus 88.2, a significant drop from a positive reading of around 100 at the end of last year. In contrast, the U.S., where labour and retail data have recently come in better than expected, was at 43.7, marking the largest gap between the two neighbours on the index in four years.
Job losses weigh heavily
National Bank's economists are not surprised by Canada's poor showing. They cited year-to-date job losses and several employment misses compared with analyst expectations. For example, the country has shed more than 110,000 positions since the start of the year. Economists had forecast the economy would add 10,000 jobs in May, but it lost almost 18,000. The biggest miss of the year came in March, when the economy lost 84,000 positions versus forecasts of a gain of 10,000.
Canada's recent poor performance on Citi's index is not its worst, however. That came in late 2022, when its score fell to nearly minus 150. At that time, economists said the Bank of Canada was bludgeoning the economy with rate hikes due to rising inflation, partly spurred by an energy supply shock after Russia declared war on Ukraine.
Similar echoes, different context
While Canada's economic numbers were worse in the latter part of 2022, the economy had been generating positive inflation surprises and momentum was building prior to the Bank of Canada's rate hike campaign, the economists said. The economic echoes of today, including an oil supply crisis and inflation worries, are similar. However, Schleich and Currie wonder whether geopolitics or bad economic surprises hold more sway on the outlook for interest rates.
There have been times when geopolitical events have pushed economic data to the sidelines in terms of the interest rate path. For example, Canada produced some stronger-than-expected numbers in early 2025, but markets focused on the threat posed by U.S. tariffs. The Bank of Canada continued to cut interest rates throughout 2025, taking them to 2.25 per cent from 3.25 per cent at the start of the year as it tried to diminish the effect of Donald Trump's tariff war.
