Canada’s economic expansion came to a halt in November, with growth in services offsetting weaknesses in goods-producing sectors, according to data released on Friday. The country’s gross domestic product remained unchanged month-on-month in November, following a 0.3% decline in October, as reported by Statistics Canada. Analysts surveyed by Reuters had predicted a marginal 0.1% growth for the month.
The impact of U.S. President Donald Trump’s tariffs on steel, automotive, lumber, and aluminum industries has significantly affected production in these sectors. Although the tariff issues have primarily affected these specific industries, a recent Bank of Canada survey indicated subdued business sentiment, decreased investments, and anticipated job cuts.
Statistics Canada’s preliminary data suggested a slight 0.1% growth in output for December, with a caution that these estimates could be revised. The lackluster performance in November signals a 0.5% deceleration in fourth-quarter growth on an annualized basis, falling short of the Bank of Canada’s latest forecast of zero growth in the final quarter of the year based on monthly GDP data by industry.
A technical recession would be declared if there were two consecutive quarters of economic contraction. Canada is projected to achieve a 1.3% growth rate for the full year of 2025, as per StatsCan. Final quarterly GDP figures, which are calculated from income and expenditure data, may differ from initial industry-based estimates.
The growth in November was primarily fueled by services-producing industries, which contribute around three-quarters of the country’s economic output. Notable sectors displaying positive growth rates in November included retail trade, transportation and warehousing, and educational services. However, the services sector saw a 2.1% decline in wholesale trade, marking its most substantial contraction since April of the previous year.
The positive momentum from the services sector was counteracted by a 0.3% contraction in goods-producing industries, marking the third decline in the past four months. Manufacturing, a crucial sector representing over eight percent of GDP, experienced a significant 1.3% decrease, remaining vulnerable to trade uncertainties, U.S. tariffs, and global economic trends.
Moreover, the output of motor vehicles and parts manufacturing plummeted by 6.4%, largely due to a global semiconductor shortage. Following closely, the agriculture, forestry, fishing, and hunting sub-sector saw a 1.1% decline in growth, as reported by the agency.