Canada’s economy faced a standstill in November as robust growth in the service sector was counteracted by weaknesses in goods-producing industries, according to data released on Friday. Statistics Canada reported that the country’s Gross Domestic Product (GDP) remained unchanged month-on-month in November, following a 0.3% contraction in October. Analysts had predicted a marginal 0.1% growth for November.
The impact of U.S. President Donald Trump’s tariffs on steel, automotive, lumber, and aluminum have significantly impacted output in these sectors. While the effects have been contained within these industries, a recent survey by the Bank of Canada indicated subdued business sentiment, reduced investments, and anticipated job cuts.
Preliminary figures from Statistics Canada suggest a slight 0.1% growth in output for December, with a caution that these estimates could be subject to revision. The lackluster performance in November is expected to result in a deceleration of fourth-quarter growth by 0.5% annualized, falling below the Bank of Canada’s earlier forecast of no growth in the final quarter, based on monthly industry GDP data. A technical recession would be declared if two consecutive quarters experience contraction.
For the full year of 2025, Canada’s growth is projected to reach 1.3%, as per StatsCan. The final GDP figures, based on income and expenditure, may vary from the estimates calculated from GDP by industry.
The growth in November was primarily propelled by services-producing industries, which contribute to approximately three-quarters of economic output. Sectors such as retail trade, transportation, warehousing, and educational services exhibited positive growth rates. However, wholesale trade within the services sector saw a significant decline of 2.1%, marking its largest contraction since April of the previous year.
On the other hand, goods-producing industries experienced a contraction of 0.3%, the third decline in four months. Manufacturing, a key sector accounting for over eight percent of GDP, witnessed a substantial drop of 1.3%, largely influenced by trade uncertainties, U.S. tariffs, and global market trends. The output of motor vehicles and parts manufacturing notably shrank by 6.4% due to a global semiconductor shortage. Additionally, the agriculture, forestry, fishing, and hunting sub-sector reported a decline of 1.1% in growth.
The data indicates a complex economic landscape in Canada, with challenges persisting across various sectors, signaling a cautious outlook for the future.