In November, Canada’s economic growth came to a standstill due to mixed performance in services and goods-producing sectors, according to recent data. Statistics Canada reported that the country’s gross domestic product remained unchanged month-on-month, following a 0.3% contraction in October. Analysts had anticipated a marginal growth of 0.1% for November, but the actual figures fell short.
The impact of U.S. President Donald Trump’s tariffs on steel, automotive, lumber, and aluminum was evident, hampering output in these specific industries. While the effects of tariffs were contained within these sectors, a Bank of Canada survey revealed subdued business sentiment, reduced investments, and anticipated layoffs.
Preliminary data for December suggests a slight 0.1% growth, although Statistics Canada cautioned that these estimates could be revised. The lackluster performance in November is expected to result in a deceleration of fourth-quarter growth by 0.5% annualized, below the Bank of Canada’s previous forecast of zero growth in the final quarter of the year.
If this trend continues for two consecutive quarters, it could signal a technical recession. Canada’s full-year growth for 2025 is projected to be around 1.3%, as per StatsCan. Final GDP figures are based on both income and expenditure, which may sometimes vary from estimates derived from GDP by industry data.
Services-producing industries were the main drivers of growth in November, accounting for approximately three-quarters of the economic output. Sectors such as retail trade, transportation, warehousing, and educational services recorded positive growth rates. However, wholesale trade within the services sector experienced a significant decline of 2.1%, marking its largest contraction since April of the previous year.
On the other hand, goods-producing industries saw a contraction of 0.3%, with manufacturing output taking a hit of 1.3%. The manufacturing sector, contributing over 8% to GDP, suffered from trade uncertainty, U.S. tariffs, and global economic trends. Notably, motor vehicles and parts manufacturing shrank by 6.4% due to a global semiconductor shortage, while agriculture, forestry, fishing, and hunting sub-sector also experienced a decline of 1.1%.
Overall, the data reflects a challenging economic landscape for Canada, with uncertainties in global trade and sector-specific challenges impacting growth trajectories.