Canada's economy contracted more than anticipated in November, driven by disruptions in inland transportation and at ports, according to Statistics Canada. The country's gross domestic product decreased by 0.2% in November, following a 0.3% increase in October, primarily due to contractions in mining, quarrying, oil sands extraction, and transportation.
Analysts had expected a 0.1% decline in GDP for November, with projections for a rebound in December. Statistics Canada's preliminary estimate indicates a potential 0.2% growth in GDP for December, fueled by upticks in retail trade, manufacturing, and construction.
Market reactions resulted in a slight decrease in the likelihood of a 25-basis-point rate cut by the Bank of Canada in March, with the Canadian dollar remaining relatively stable at C$1.4468, or 69.12 U.S. cents. Further insights into economic performance will be unveiled next month alongside the fourth-quarter GDP figures.
The Bank of Canada remains cautious about economic recovery despite previous rate cuts, trimming its GDP growth forecast for 2025 to 1.8% from 2.1%. Governor Tiff Macklem emphasized the importance of sustained growth following a recent rate cut, expressing concerns over potential impacts on growth if U.S. President Donald Trump imposes tariffs on Canadian imports.
In November, services-producing industries contracted by 0.1%, particularly impacted by transportation and warehousing with a significant 1.3% decline. Meanwhile, within the goods-producing sector, mining, quarrying, and oil and gas extraction saw a 1.6% decrease in output.