Economy stalled in November and may have contracted in Q4: StatCan

OTTAWA – Statistics Canada says the economy stalled in November and early estimates suggest a decline in real gross domestic product for the final quarter of 2025.

Real GDP growth was flat in November, rebounding somewhat from a decline of 0.3 per cent in October, the agency said.

StatCan said drops in activity in goods-producing industries were offset by expansion on the services side of the economy.

Manufacturing faced a 1.3 per cent decline in November. StatCan said the output of motor vehicles and parts hit a bottleneck as a global shortage of semiconductors curtailed production at a major auto plant.

November saw manufacturing of durable goods hit its lowest levels since 2011, outside the COVID-19 pandemic.

Activity in the wholesale trade sector fell 2.1 per cent thanks to the declines in automotive output. The agriculture, forestry, fishing and hunting industries also contracted in the month.

Retail trade expanded 1.3 per cent in November, StatCan said, more than offsetting two previous months of declines.

Various sectors also saw rebounds in November thanks to the end of strikes at Canada Post, Alberta schools and British Columbia liquor stores.

StatCan’s flash estimates suggest real GDP increased 0.1 per cent in December as the manufacturing and wholesale trade sectors returned to growth.

If that early look at the data lines up with next month’s quarterly GDP report, StatCan said the economy would have contracted 0.5 per cent on an annualized basis in the final quarter of 2025. 

A contraction in the economy to end 2025 would mark a sharp swing lower from annualized growth of 2.6 per cent in the third quarter. The economy also shrank in the second quarter of 2025 as U.S. tariffs took hold.

“Today’s results reinforce the theme that the economy struggled to grow at all in Q4 after a surprisingly perky Q3,” said BMO chief economist Doug Porter in a note to clients Friday.

Porter said the economy will struggle to post growth of much more than one per cent in 2026, “with the sluggish hand-off from 2025 as well as the lingering cloud of uncertainty on the trade front.”

Based on the initial estimates, StatCan estimates real GDP would have increased 1.3 per cent last year.

The Bank of Canada said in updated forecasts released earlier this week that it expected growth to be flat overall in the fourth quarter. The central bank expects the economy to recover modestly in 2026.

For a second consecutive decision, the bank held its benchmark interest rate steady at 2.25 per cent on Wednesday.

Porter said the latest GDP figures are not markedly different from the Bank of Canada’s updated projections and will do little to shift the central bank from the sidelines.

CIBC senior economist Andrew Grantham agreed with Porter, arguing that the Bank of Canada’s policy rate is at a low enough level to give a bit of a lift to a struggling economy.

“Overall today’s data are unlikely weak enough to revive talks for further interest rate cuts by the bank, but it is clear that rates will need to be held at stimulative levels for a while to drive a recovery amid the continued uncertain economic environment,” Grantham said in a note.

This report by The Canadian Press was first published Jan. 30, 2026.