Canada's economy shrank by 0.3% in August

Thomson Reuters

· Posted: Oct 31, 2025 9:03 AM EDT | Last Updated: October 31

Canada's system shrank successful August against wide expectations of nary growth, Statistics Canada information showed connected Friday, but an precocious estimation pointed retired the system mightiness flight a recession successful the 3rd quarter.

The system shrank by 0.3 per cent successful August pursuing an upwardly revised study of 0.3 per cent maturation successful the erstwhile month, Statistics Canada said, which efficaciously offsets immoderate maturation truthful acold successful the existent quarter.

This was the 4th monthly contraction successful 5 months and was led by a driblet successful output from some the services and goods sector, it said.

An beforehand indicator suggested that the monthly GDP would apt grow by 0.1 per cent successful September, taking the full annualized maturation of the 3rd 4th to 0.4 per cent, missing Bank of Canada's forecast.

The beforehand estimation is not ever close and could change. The annualized quarterly estimation is based connected concern output information portion StatsCan volition people the annualized quarterly GDP based connected income and expenditure.

A apt maturation successful the 3rd quarter, which is hinged connected the system boosting its output successful September connected an aggregate, means Canada could debar a recession successful Q3.

Two quarterly contractions successful a enactment is considered a recession.

Tariffs proceed to hammer the economy

Canada's GDP had shrank successful the 2nd 4th by 1.6 per cent arsenic the interaction of tariffs connected steel, cars, lumber and aluminum and wide commercialized uncertainty reduced exports and wounded growth.

The Bank of Canada said this week that the 3rd 4th annualized GDP was apt to beryllium 0.5 per cent.

The manufacturing sector, which is the hardest deed owed to U.S. tariffs and accounts for astir a tenth of the GDP, contracted by 0.5 per cent successful August, information from the statistical bureau showed.

The biggest drop, however, was seen successful mining, quarrying and lipid and state extraction, which contracted by 0.7 per cent, chiefly owed to a 1.2 per cent driblet successful metallic ore mining and a 5 per cent driblet successful ember mining, Statistics Canada said.

Among the services sector, the main contractions were seen successful proscription and warehousing, successful portion due to the fact that of an hose strike, arsenic good arsenic wholesale trade.

However, maturation successful retail commercialized and existent property and rental and leasing helped offset immoderate of the driblet successful the services sector.