By Melissa Shin
(Bloomberg) — The Canadian economy continues to display resilience despite U.S. tariffs, with initial estimates showing a small expansion last month.
Industry-based gross domestic product grew by 0.1% in November, according to a flash estimate from Statistics Canada on Tuesday. It had fallen by 0.3% in October, matching the monthly contraction expected in a Bloomberg survey of economists.
Charles St-Arnaud, chief economist at Servus Credit Union, said his analysis suggests the economy will shrink by 0.2% in the fourth quarter, pointing to “the weak starting point to Q4 and the lack of rebound in November.”
“The Canadian economy is skating on thin ice in Q4,” said Michael Davenport, senior Canada economist with Oxford Economics. “Although the economy avoided a technical recession in 2025, we expect weak underlying momentum to carry through H1 2026.”
The manufacturing sector fell 1.5% in October, largely offsetting an expansion from the previous month, primarily due to a drop in machinery manufacturing. Wood product manufacturing recorded its largest decline since April 2020, reflecting production slowdowns after the U.S. government imposed additional tariffs on Canadian lumber beginning Oct. 14.
Labour disruptions also contributed to October’s contraction. Strikes by teachers in Alberta, government workers in British Columbia and postal workers nationally reduced activity in the public sector, alcohol retailers, and transportation and warehousing, respectively.
Mitigating the overall GDP drop was the finance and insurance sector, which rose 0.4% in October in its fifth consecutive monthly increase.
“The subdued November rebound suggests that the Canadian economy has some work cut out to avoid another negative print for the final quarter of the year,” said Robert Kavcic, senior economist with Bank of Montreal, in a client note.
Tuesday’s report “shows that economic activity remains volatile in Canada,” St-Arnaud said. “The modest growth in recent months is also somewhat at odds with the strength in the labour market, which saw strong job creation in recent months.”
The Bank of Canada kept its policy interest rate at 2.25% on Dec. 10, calling the economy “resilient overall” but warning of elevated uncertainty.
Governor Tiff Macklem also signalled that the bank will continue to hold rates steady in the near term, absent any surprises to its outlook.
–With assistance from Mario Baker Ramirez and Laura Dhillon Kane.
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Last modified: December 23, 2025
