Canadian Economy Shrinks by 0.2% in November
Canada’s Economy Shrinks by 0.2% in November, Largest Monthly Decline Since 2023
Canada’s economy contracted by 0.2% in November, exceeding expectations and marking the largest monthly decline since December 2023, Statistics Canada reported on Friday.
The contraction follows a 0.3% increase in October, driven primarily by a decline in output from mining, quarrying, oil sands extraction, and transportation, among other sectors.
Economic weakness was widespread, with 13 of 20 industries shrinking. A major factor was work stoppages in inland transportation and at ports, which significantly impacted economic activity.
The services sector declined by 0.1%, with transportation and warehousing leading the drop at 1.3%—its steepest decline in two years—largely due to postal service disruptions and labor actions at ports, according to StatsCan.
Among goods-producing industries, mining, quarrying, and oil and gas extraction recorded a 1.6% drop.
Analysts polled by Reuters had predicted a 0.1% decline in GDP for November. However, a preliminary estimate suggests a 0.2% rebound in December, led by gains in retail trade, manufacturing, and construction, StatsCan said.
The final December GDP figures, along with fourth-quarter economic growth data, will be released next month. StatsCan’s initial estimate points to an annualized fourth-quarter GDP growth of 1.8%, aligning with the Bank of Canada’s latest forecast.
Central Bank’s Outlook
The Bank of Canada has been closely monitoring economic activity following multiple interest rate cuts. Since June, the central bank has reduced rates by a total of 200 basis points, bringing the benchmark rate to 3%.
Despite a 25-basis-point cut this week, Governor Tiff Macklem stated that while growth is picking up, the bank wants to see sustained momentum.
The central bank revised its 2025 GDP growth forecast downward to 1.8% from the previously projected 2.1%, citing slower population growth as a key factor.
Further risks to economic growth remain, particularly if former U.S. President Donald Trump reinstates 25% tariffs on all Canadian imports, which could weigh heavily on trade and investment.
