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Population growth in Canada this past year has been historic.

The pace over the last 12 months was the highest in this country since 1957 and eclipsed most of the world including China, India and the United States.

This surge in population is one reason Canada’s economy has appeared so resilient under the weight of rising interest rates — at least on the surface — as newcomers contribute to headline gross domestic product by increasing demand in the economy and the supply of workers.

“Immigration is the only reason why the economy may avoid recession,” writes Stephen Brown, deputy chief North America economist for Capital Economics, “but even this latest acceleration might not be enough.”

GDP numbers out Friday showed momentum remains weak after the economy contracted in the second quarter. July’s reading was flat and August’s growth was estimated at 0.1 per cent.

That puts the third quarter on track for 0.2 per cent growth if September’s reading is also flat.

But it could easily go the other way, say economists. And other more timely indicators are flashing warnings.

The Canadian Federation of Independent Business’ September Business Barometer was the weakest since the pandemic’s first lockdown in 2020 and suggests GDP likely fell last month, said Brown. Such a decline could add up to two consecutive quarterly contractions, the technical definition of recession.

“While recent employment gains mean it would be a stretch to call this a recession just yet, it will begin to feel like one if employment falls next quarter as we expect,” said Brown.

Other data this past week showed a sharp drop in the job vacancy rate for July from 4.3 per cent to 3.9 per cent. A decline in Indeed.ca job listings in August and September and the plunge in unskilled labour shortages in the CFIB survey signal that the rate has fallen further since then, he said.

Recent confidence surveys do not bode well for the economy, says National Bank economist Matthieu Arseneau.

Eight out of 10 provinces in the CFIB barometer showed pullbacks in their outlook, with Ontario and Quebec the worst of the lot. Nine out of 13 sectors posted declines, “also suggesting widespread economic weakness for the coming months,” he said.

The mood of consumers appears to be just as pessimistic. The Conference Board of Canada’s latest consumer confidence index also dropped to its lowest since the start of the pandemic. As Arseneau’s chart below shows, both consumer and small business confidence levels are now at recessionary lows.

Is this enough to stay the Bank of Canada’s hand this month?

Arseneau points out that the Bank in its deliberations for the September decision indicated that weak demand would not be enough; it would need to see evidence that the slowdown was calming inflation.

“This approach carries a high risk of overkill, given that the economy has yet to feel the full impact of the rate hikes already implemented,” Arseneau said.

“Let’s hope the Bank of Canada will be patient by considering the significant weakening of the economy and the tightening of financial conditions brought about by higher global interest rates.”

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Canada’s economy was flat in July, Statistics Canada gross domestic product data revealed Friday. After contracting in June, this reading and early estimate of 0.1 per cent growth in August sets the economy up for a much weaker performance in the third quarter than the Bank of Canada had forecast.

Nor do economists expect the lack of momentum to turn around soon. National Bank of Canada economists say with consumer and small business confidence at recessionary lows, a contraction could be in the cards for the fourth quarter.

Get all today’s top breaking stories as they happen with the Financial Post’s live news blog, highlighting the business headlines you need to know at a glance.

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Today’s Posthaste was written by Pamela Heaven, @pamheaven, with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.

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