Canada’s population decline may just be a distant memory after the data is updated. In June, Statistics Canada’s (StatCan) population estimate contained a stark warning that its data will see an unusually large revision. CIBC economists expect the revision will be large enough to reverse the reported declines and expose a new problem—Canada’s job numbers may be worse than reported, and there’s no longer an excuse for poor economic growth.
Canada’s Upcoming Population Revisions Likely Eliminate Decline
StatCan reported a quarterly population decline of 55,025 people in Q1 2026, shedding 234,597 people since July 2025. The drop follows immigration caps after the country’s aggressive immigration programs saw its non-permanent residents (NPRs) population more than triple over a few years. At its peak, NPRs represented nearly 1 in 12 people in Canada. StatCan itself says the revisions are expected to start in September and will be larger than usual.
CIBC economists warn that StatCan’s methodology counts expired permits as outflows. They argue that many of those with now-expired permits legally stayed in the country, obtaining another form of legal temporary status.
“The full scope of these revisions is still unknown. However, it is highly likely that a sufficient number of NPRs will be recognized as legally resident in Canada — despite having previously been treated in published data as having exited — to revise Canada’s 2025 population change back into positive territory,” explains CIBC economist Benjamin Tal.
He estimates 160,000 more people in 2025, and 210,000 in both 2026 and 2027. This suggests the baseline undercounting also skews future projections.
While that may seem like a positive for aggregate demand, those same updates would expose underlying weaknesses in the broader economy.
Canada’s Job Market Is Much Worse Than Thought with Revisions
Canadian employment data, like the Labour Force Survey (LFS), rely on population estimates. The LFS would have counted former NPRs as employed in its survey, but because StatCan uses a 12-month moving average to smooth NPR data, these individuals don’t immediately exist in the population denominator. CIBC warns that this lag is biasing the employment and unemployment rates, suggesting a potential erosion if upward revisions are made.
Tal didn’t share any calculations on the LFS impact, but some quick napkin math shows it may be a big deal. StatCan reported a 6.8% unemployment rate in 2025, but it can be as high as 7.5% if CIBC’s estimates flow directly into the LFS. That’s the difference between a soft job market and one approaching recessionary levels.
The 210,000-person methodology gap the bank projects for both 2026 and 2027 would have an even bigger impact.
Canada’s Revisions Change Estimates and Narrative, Not Population
CIBC’s revised scenarios show NPRs as a share of the total population will still fall, just not as much as stated. Canada originally stated its goal was to gradually reduce NPRs to 5% of the population by the end of 2026. It delayed that date until the end of 2027, though the PBO has previously suggested it’s being done through an accounting scheme—not pure throttle.
CIBC projects that NPRs will represent 6.9% of the population in 2025, 0.5 percentage points above the current 6.4% estimate. The current public projections then see the share falling to 5.5% in 2026, and 4.8% in 2027. Tal’s projections don’t see that 5.0% threshold being met by 2027, instead falling just short at 5.4% of the population. Cue the sad trombone.
The revisions don’t change the number of people in Canada, they’re just miscounted. However, these revisions have a material impact on the narrative around the Canadian economy’s health. The justification of a slowing economy due to a shrinking population no longer applies; it’s just a slow economy. The rising vacancy rates and slow home sales are now a mystery, as housing demand shouldn’t have dropped off so sharply. Unemployment is almost certainly higher than reported, and the per capita real GDP recovery is, well, not really recovering.
Canada is also currently underestimating its population, but has historically overestimated it. For at least three decades before the recent population surge, it overestimated its immigrant population by roughly 1 in 7 people. It assumed every landed person continued to live in the country, even though all evidence pointed to the contrary. It’s unclear how those two issues balance, but what’s clear is Canada overestimated its population for a long time, and now it’s overestimating its population slowdown.
I’d be suspicious. The housing policies always drive people out. Could it be the insane Trump is causing Canadians to stay North?
Insane. No. Not popular with everyone, especially when your country is on his naughty list. TDS is high in eastern Canada. Not so much out west, where sanity prevails. The border security, war on drugs, The warning to NATO countries to pony up for Military enforcement. The government accountability are reasons to vote for the republicans. Hurting right now is Ontario. However the Republican promise was to bring jobs home. He is doing as he promised.
During Covid they did stimulus and QE, which caused the 8% inflation. If you see the Phillips curve you’ll see that causes a labor shortage in the short term. This is a natural part of an economy, and wipes out the wealth inequality caused by asset appreciation via bargaining power for wages, if you remember the “quiet quitting” phenomenon a few years back.
The Federal government then did mass immigration, 1.4 million a year, tripling immigration over 3 years. They also allowed students to work 40 hours. This decreased labor pressure and lowered wage growth.
The Bank of Canada then raised interest rates to cool the job market. Now we have cooled wages, less need for workers, and an inevitable surplus of workers. All this was also done when we had a preexisting housing shortage, so rents and housing prices dramatically increased as well.
Assuming that TFW’s and those here from study permits leave when their visa expires is, and always has been, extraordinarily naive.
Great blog as usual, Daniel.
When the Canadian LFS data are updated, the supplementary unemployment rates that are published don’t get much attention, possibly because they are unadjusted for seasonal variation. In July R3, the Canadian unemployment rate adjusted to American concepts, rose from 5.1% to 5.4%, while the US unemployment rate stayed the same at 4.4%. This widened the gap between the two unemployment rates (the American rate is almost always lower) but we are talking about raw rates. If we compare this 1.0 percentage point differential for July 2026 with the 1.4 percentage point differential for July 2025 when R3 was at 6.0% and the raw US unemployment rate was at 4.6%, it seems that the Canadian labour market situation has improved relative to its American counterpart over the last 12 months. But, as you say, this is all pretty dicey given the terrible problems we now have measuring the active population, the labour force and the number of unemployed. And these are not in the nature of things, but self-inflicted wounds.