Canada’s economic expansion halted in November due to a mix of growth in service industries and weakness in goods-producing sectors, according to data released on Friday. The month-on-month Gross Domestic Product (GDP) remained unchanged in November, following a 0.3% decline in October, as reported by Statistics Canada. Analysts surveyed by Reuters had predicted a slight 0.1% growth for November.
The implementation of significant tariffs by U.S. President Donald Trump on steel, automotive, lumber, and aluminum has negatively impacted production in these specific sectors. Although the tariff effects have predominantly affected these industries, a recent Bank of Canada survey indicated subdued business sentiment, reduced investments, and anticipated job cuts.
Statistics Canada’s preliminary assessment suggests a slight 0.1% growth in output for December, with a caution that this estimate might be revised. The performance in November indicates a deceleration of fourth-quarter growth by 0.5% annualized, falling below the Bank of Canada’s recent projection of no growth in the final quarter based on monthly industry GDP data. A technical recession would occur if there are two consecutive quarters of contraction.
Canada’s annual growth for 2025 is projected at 1.3%, according to StatsCan. It is important to note that the final reported quarterly GDP figures, based on both income and expenditure, may sometimes differ from the estimates calculated from GDP by industry data.
The growth in November was primarily fueled by service-producing industries, which make up about 75% of the country’s economic output. Retail trade, transportation, warehousing, and educational services were the top-performing sectors with positive growth rates in November. However, the wholesale trade sector experienced a notable decline of 2.1%, its largest contraction since April of the previous year.
The positive momentum in services was counteracted by a 0.3% contraction in goods-producing industries, marking the third contraction in the last four months. Manufacturing output, a sector contributing over 8% to the GDP, witnessed a significant decline of 1.3%, reflecting its vulnerability to trade uncertainties, U.S. tariffs, and global economic trends. The manufacturing of motor vehicles and parts notably decreased by 6.4% due to a global semiconductor shortage. Additionally, the agriculture, forestry, fishing, and hunting sub-sector saw a 1.1% decline in growth during the same period.