Canada’s economic expansion came to a halt in November as growth in service industries was counterbalanced by a decline in goods-producing sectors, according to data released on Friday. The country’s Gross Domestic Product (GDP) remained unchanged month-on-month in November, a significant improvement from the 0.3% contraction experienced in October, as reported by Statistics Canada.
Economists surveyed by Reuters had predicted a modest 0.1% growth for November, which was not met. The impact of U.S. President Donald Trump’s tariffs on steel, automotive, lumber, and aluminum has negatively affected these specific industries, leading to reduced output.
Although the tariff-related issues have been contained within these sectors, a recent survey by the Bank of Canada indicated subdued business sentiment, decreased investments, and anticipated job cuts. Preliminary data from Statistics Canada suggested a slight 0.1% growth in December, but this estimate is subject to revision.
The performance in November has resulted in a fourth-quarter growth rate slowdown of 0.5% on an annualized basis, falling short of the Bank of Canada’s forecast of no growth in the final quarter based on monthly industry-specific GDP data. A technical recession would be declared if there are two consecutive quarters of contraction.
Canada is projected to achieve a full-year growth rate of 1.3% in 2025. It’s important to note that final GDP figures may differ from estimates derived from industry-specific GDP calculations, as they are based on income and expenditure.
In November, growth was primarily driven by service-producing sectors, which contribute about three-quarters of the country’s economic output. The top three sectors showing positive growth rates were retail trade, transportation and warehousing, and educational services. However, the services industry did experience a notable decline of 2.1% in wholesale trade, the largest contraction since April of the previous year.
On the other hand, goods-producing industries contracted by 0.3%, marking the third contraction in the last four months. Manufacturing, a significant contributor to GDP, saw a substantial decline of 1.3%, reflecting the industry’s exposure to trade uncertainties, U.S. tariffs, and global economic trends. Specifically, the output of motor vehicles and parts manufacturing decreased by 6.4% due to a worldwide semiconductor shortage.
Additionally, the agriculture, forestry, fishing, and hunting sub-sector witnessed a 1.1% decline in growth. These trends in both service and goods-producing industries are indicative of the challenges faced by the Canadian economy in recent months.