The economy experienced a slowdown in November, and preliminary estimates indicate a decrease in real gross domestic product (GDP) for the last quarter of 2025, Statistics Canada says.
Real GDP growth remained unchanged in November, showing a slight recovery from a decrease of 0.3 percent in October, StatCan said in its Jan. 30 report.
StatCan reported that declines in activity within goods-producing industries were balanced by growth in the services sector of the economy.
Manufacturing experienced a 1.3 percent decline in November. StatCan said the production of motor vehicles and parts was constrained due to a global semiconductor shortage that limited output at a major automotive facility.
Durable goods also took a hit in November, according to the report.
“Durable-goods manufacturing has declined in November to levels last seen in mid-2011, excluding the first half of 2020 when the COVID-19 pandemic began,” StatCan said.
The wholesale trade sector experienced a decline of 2.1 percent, attributed to reductions in automotive production, while the agriculture, forestry, fishing, and hunting industries also saw contractions during the month.
Several industries experienced a resurgence in November due to the conclusion of strikes at Canada Post, schools in Alberta, and liquor stores in British Columbia, the report said.
Retail trade was one of the sectors to grow, expanding 1.3 percent in November. That growth more than offset two previous months of declines, StatCan said.
Outlook
StatCan’s preliminary estimates indicate that real GDP rose by 0.1 percent in December, as both the manufacturing and wholesale trade sectors experienced a return to growth.Should the preliminary analysis of the data correspond with the quarterly GDP report for next month, StatCan indicated that the economy would have experienced a contraction of 0.5 percent on an annualized basis in the last quarter of 2025.
A contraction in the economy by the end of 2025 would signify a significant decline from the annualized growth rate of 2.6 percent observed in the third quarter.
An investors note from Bank of Montreal chief economist Douglas Porter said the results emphasize the theme that the economy “struggled to grow at all” in the final quarter after a “surprisingly perky” third quarter.
Porter noted the predicted 0.5 percent contraction, but said there would likely be little improvement this year.
“For 2026, the economy will do well to post growth of much more than 1 percent this year, with the sluggish hand-off from 2025 as well as the lingering cloud of uncertainty on the trade front,” he said in the Jan. 30 note, referring to the ongoing trade disputes between Canada and the United States.
CIBC senior economist Andrew Grantham agreed the trade tension between the two countries are playing a role.
“It’s clear that tariffs and related trade uncertainty continues to drive volatility and general weakness in trade-sensitive areas of the economy such as manufacturing and wholesaling,” he said in a Jan. 30 post. “It’s also clear that there isn’t too much momentum in the rest of the economy either, particularly once the rebounds in education and transportation that were simply the result of strikes ending are excluded.”
TD economist Marc Ercolao said in a Jan. 30 post that today’s StatCan report shouldn’t impact the Bank of Canada’s (BoC) next policy decision on March 18.
“We don’t think today’s data moves them off of their current policy stance even as they acknowledge that considerable uncertainty around trade and overall economic growth is still present,” he wrote. “All told, we maintain our view that the BoC has reached the end of their interest rate easing cycle.”
Grantham predicted the national bank would continue to hold interest rates “in stimulative territory” throughout this year and into the start of 2027.
The Canadian Press contributed to this report.
