EconoFACTS

June 18, 2025 | 09:45

Canada’s Population Estimates (2025Q1) — Down the Mountain

Economist

Robert Kavcic

Senior Economist and Director
Economics

Robert has been with BMO Capital Markets since 2006. He plays a key role... (Read more)

Robert Kavcic

Senior Economist and Director
Economics

Robert has been with BMO Capital Markets since 2006. He plays a key role... (Read more)

Canada’s population grew 1.2% y/y in Q2 (marked as of April 1st, 2025), down sharply from highs above 3% seen as recently as 2024Q3. On an annualized and seasonally-adjusted basis, growth was just 0.8%, the slowest non-pandemic print since 2015.

We’ve argued all along that the explosion in population growth—to nearly 1.3 mln people within a year at one point—was playing a major role in many economic issues Canadian policymakers have been struggling to deal with. Some examples include: housing affordability; surging rent; productivity and infrastructure stress; services inflation; and youth unemployment rates. New immigration targets set last fall (and to be carried through by the current government) are clearly now having an impact.

Nonpermanent immigration to Canada remained negative in Q1 (i.e., a net outflow) following caps on international students and temporary foreign workers put in place last year. In raw terms, there was a net outflow of 61,000 NPRs in the quarter, or just under 100k on a seasonally-adjusted and annualized basis. The process of normalizing this segment of the population is now well underway—Ottawa is targeting a 5% share from above 7% at the high. That implies further net outflows ahead, likely right through 2026. The impact is already being seen on the ground, perhaps most vividly in loosening rental markets.

Meantime, permanent immigration remained solid at above 330k (saar) in Q1, although that's also down from recent highs given reduced federal targets.

And, Canadians are still having few babies (doing my part here—I've got three). This reinforces the need for a robust and well-managed permanent immigration program.

Canadians continued to move around the country at the start of the year, but perhaps with less urgency. A few highlights:

Net migration to Alberta remained strong at near-8,000 people seasonally adjusted in Q1 (32k per year). A strong economy and favourable affordability remain draws.

Atlantic Canada’s inward migration boom has all but fizzled out. This had been a blessing (driving growth) and a curse (infrastructure and housing stress) for the region, but that appears to be normalizing.

Ontario is seeing fewer net outflows. Interestingly enough, as international immigration caps set in (which will be felt disproportionately in Ontario), it might lead to less pressure for resident Ontarians to go elsewhere—largely because of less stress on housing affordability. Indeed, affordability was probably the biggest reason for movement to Alberta and Atlantic Canada; but with Ontario prices and rents down (while the latter remain lofty), the 'movement-for-affordability arbitrage' might be running its course.

The Bottom Line: A major population adjustment is now well underway; before that trade war broke out, it was arguably one of the biggest economic stories in Canada. The process will take us back to conditions that more closely resemble those in the pre-pandemic decade: About 1% population growth; sturdy permanent immigration, some NPR flows where needed; but fewer babies.