FAO RELEASES ONTARIO ECONOMIC MONITOR
TORONTO, August 21, 2025 – Today, the Financial Accountability Office of Ontario (FAO) released a report which provides an overview of the latest trends in the Ontario economy from January to June 2025.
Ontario’s economic activity measured by real Gross Domestic Product (GDP) increased by a solid 0.6% in the first quarter of 2025, the same growth rate as in 2024 Q4, as gains in international exports, household consumption and business investment in machinery and equipment were partially offset by lower residential investment.
Following the implementation of US tariffs, the latest economic indicators suggest mostly negative results for Ontario’s economy in the second quarter of 2025, with losses in employment, manufacturing sales, wholesale and retail trade, and international exports. In contrast, the housing market rebounded in the second quarter, with both home resales and housing starts increasing.
In an April 2025 report, which reviewed the potential impacts of US tariffs on Ontario’s economy, the FAO estimated that Ontario’s annual real GDP growth would slow to 0.6% in 2025. While Ontario’s economic indicators in 2025 Q2 were consistent with the FAO projection, real GDP growth in the first quarter was stronger than expected. Taken together, these results pose modest upside risks to the FAO’s outlook, while subsequent tariff changes are expected to have both positive and negative impacts. The FAO will continue to monitor Ontario’s economic performance and will update its forecast for economic growth in its next Economic and Budget Outlook report.
To learn more, read the full report here.
Quick Facts:
- Employment in Ontario declined significantly by 38,000 (or -0.5%) in 2025 Q2, the first quarterly loss in nearly three years. The unemployment rate rose for the ninth consecutive quarter, reaching 7.8% in 2025 Q2.
- Ontario’s manufacturing sector was the hardest hit, with job losses of 29,400 (-3.5%) as tariffs came into place, marking the largest loss since 2009, excluding the pandemic.
- Among Ontario’s Census Metropolitan Areas (CMAs), Windsor saw the sharpest employment decline (-4.3%) in 2025 Q2. Windsor’s unemployment rate reached 11.2%, the highest among all Canadian CMAs.
- The CPI inflation rate in Ontario was 1.7% in 2025 Q2, down from 2.2% in 2025 Q1, reflecting in part the removal of the Canadian consumer carbon tax in April.
- Housing starts in 2025 Q2 totalled 17,300 units in Ontario, a 37.3% increase from the low of 12,600 units started in 2025 Q1.
- International merchandise exports dropped dramatically by 10.2% in 2025 Q2, reflecting the impact of newly imposed US tariffs, as well as a pullback in trade activity that had accelerated ahead of the implementation of tariffs.
About the FAO:
Established by the Financial Accountability Officer Act, 2013, the Financial Accountability Office of Ontario (FAO) provides independent analysis on the state of the Province’s finances, trends in the provincial economy and related matters important to the Legislative Assembly of Ontario.
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For further information, please contact:
Sophia Zhu l 416 931 5498 l SZhu@fao-on.org l fao-on.org