Canada's GDP Contracts 0.2% in November, Led by Transportation Slowdown
Canada's economy experienced an unexpected contraction of 0.2% in November, as disruptions in transportation sectors impacted activity. The decline was primarily driven by downturns in mining, quarrying, oil sands extraction, and transportation, according to Statistics Canada.
Analysts had anticipated a more modest 0.1% GDP drop, but economists predict a rebound in December. Preliminary estimates indicate a 0.2% rebound, with contributions from retail trade, manufacturing, and construction.
Despite several rate cuts, the Bank of Canada remains concerned about the slow pace of economic recovery. The central bank recently lowered interest rates by another 25 basis points, bringing the cumulative reduction since June to 200 basis points. Governor Tiff Macklem acknowledged that growth is picking up but emphasized the need for sustainability.
The bank has revised its 2025 GDP growth forecast downward to 1.8% from the earlier estimate of 2.1%, reflecting a decline in population. The outlook could be further impacted by potential tariffs on Canadian imports.
In the services sector, transportation and warehousing led the 0.1% contraction with a 1.3% decline, the largest in two years. Postal service disruptions and labor actions at ports contributed to the slowdown. Mining, quarrying, and oil and gas extraction also saw a significant drop of 1.6%.
The December GDP figures, along with the fourth-quarter economic growth estimate, will be released next month.