Canada’s economy stalled in November, may shrink in fourth quarter of 2025
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Canada’s economic growth stalled in November as growth in services was offset by weakness in goods-producing industries, data showed on Friday, providing new signals on the state of the economy after nearly a year of tariffs and uncertainty.
Statistics Canada said gross domestic product was flat month-over-month in November, compared with a 0.3 per cent contraction in October.
Analysts polled by Reuters had expected a modest 0.1 percent growth in November.
US President Donald Trump’s heavy tariffs on steel, automotive, wood and aluminum have hit production in these sectors.
Although the tariff problem has not spread beyond these sectors, a recent Bank of Canada survey showed that business sentiment was weak, investment was down and companies feared layoffs.
On a preliminary basis, Statistics Canada said output is expected to increase by a modest 0.1 per cent in December, although the agency cautioned that the advance estimate could be revised down.
The November performance marked a 0.5 per cent decline in fourth-quarter growth on an annual basis, below the Bank of Canada’s latest forecast of no growth in the final quarter of the year, based on monthly gross domestic product, according to industry data.
Two consecutive quarters of contraction would constitute a technical recession.
Canada’s full-year growth is expected to be 1.3 per cent in 2025, StatsCan said.
The final reported quarterly GDP numbers are based on income and expenditures and may sometimes differ from estimates calculated from GDP by industry.
Services grow, goods contract
Growth in November was driven mainly by service-producing industries, which account for about three-quarters of economic output.
Retail trade, transport and warehousing and educational services were the top three sectors that recorded positive growth rates in November.
However, in the services sector, wholesale trade declined 2.1 percent, the biggest contraction since April last year, the statistics agency said.
Most of the strength coming from services was offset by goods-producing industries, which declined 0.3 percent, the third contraction in four months.
Manufacturing output, which contributes more than eight per cent to GDP, recorded a huge decline of 1.3 per cent. This industry is most affected by trade uncertainty, US tariffs and global trends.
StatsCan said motor vehicles and parts manufacturing output fell 6.4 percent, largely due to a global semiconductor shortage.
The decline in manufacturing was followed by a decline in the agriculture, forestry, fishing and hunting sub-sector, where growth declined by 1.1 percent, the agency said.
