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% in October, the agency said.
Statistics Canada said drops in activity in goods-producing industries were offset by expansion on the services side of the economy.
Manufacturing faced a 1.3% decline in November. Statistics Canada 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 pandemic.
Activity in the wholesale trade sector fell 2.1% thanks to the declines in automotive output. The agriculture, forestry, fishing and hunting industries also contracted in the month.
Retail trade expanded 1.3% in November, Statistics Canada 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.
Statistics Canada’s flash estimates suggest real GDP increased 0.1% 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, Statistics Canada said the economy would have contracted 0.5% 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% 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 1% 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, Statistics Canada estimates real GDP would have increased 1.3% 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% 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.