Canada’s economic expansion came to a halt in November as an upsurge in services was counterbalanced by weakness in goods-producing sectors, according to data released on Friday. Gross domestic product (GDP) remained unchanged from the previous month, following a 0.3% decline in October, as reported by Statistics Canada. Analysts, in a Reuters poll, had predicted a slight growth of 0.1% for November.
The imposition of significant tariffs by U.S. President Donald Trump on steel, automotive, lumber, and aluminum has adversely affected production in these industries. Although the impact of tariffs has been limited to these sectors, a recent survey by the Bank of Canada revealed subdued business sentiment, reduced investments, and anticipated job cuts.
Initial estimates from Statistics Canada suggest a marginal 0.1% growth in December, with a caution about possible revisions. The lackluster performance in November indicates a 0.5% annualized slowdown in fourth-quarter growth, falling below the Bank of Canada’s recent forecast of zero growth in the final quarter, based on monthly GDP data by industry. A technical recession would ensue if there are two consecutive quarters of contraction.
Canada’s overall growth for the year 2025 is projected at 1.3%, according to StatsCan. Final GDP figures may vary from preliminary estimates as they are based on income and expenditure calculations.
The growth in November was primarily led by services-producing industries, which contribute around three-quarters of the economy. Retail trade, transportation, warehousing, and educational services were the top performers in terms of growth. However, the wholesale trade sector saw a significant downturn of 2.1%, its most substantial decline since April of the previous year.
The positive momentum from the services sector was offset by a 0.3% decline in goods-producing industries, marking the third contraction in the last four months. Manufacturing, a key GDP contributor, experienced a notable decline of 1.3%, with the industry facing challenges from trade uncertainties, U.S. tariffs, and global market shifts. The motor vehicles and parts manufacturing sector recorded a substantial 6.4% decrease, mainly due to a global semiconductor shortage. Additionally, the agriculture, forestry, fishing, and hunting sub-sector saw a 1.1% decline in growth.
