Canada GDP remains flat in November as manufacturing slump offsets service gain

Investing.com -- The Canadian economy remained stuck in neutral this November, as a deepening slump in industrial production neutralized a modest recovery in the service sector. According to Statistics Canada, real gross domestic product was essentially unchanged for the month, following a 0.3% contraction in October.

The manufacturing sector fell 1.3% in November, marking a significant drag on the nation’s output as supply chain bottlenecks resurfaced. Statistics Canada noted that "output of motor vehicles and parts manufacturing (-6.4%) was largely constrained by a global semiconductor shortage," which forced assembly lines to a halt.

Wholesale trade also faced a sharp downturn, contracting 2.1% in the largest monthly decline since early last year. This weakness was again tied to the automotive sector, as motor vehicle and parts wholesalers saw activity "reflecting lower activity in both the motor vehicle and used motor vehicle parts and accessories industry groups."

In contrast, the retail sector provided a rare bright spot by expanding 1.3% with growth recorded across all subsectors. This rebound was bolstered by a recovery in food and beverage sales following the resolution of regional labor disputes in Western Canada.

Public sector activity rose 0.4%, driven primarily by a return to normalcy in the educational services branch. Growth in this area was largely attributed to "a rise in elementary and secondary schools (+1.7%), as classes resumed in Alberta following the end to the teachers’ strike."

The transportation and warehousing sector grew 0.9%, aided by a dramatic 41.7% surge in postal services. This specific spike occurred because "mail and parcel delivery activities resumed after all job actions were suspended on November 21" following a tentative union agreement.

Agriculture and forestry continued their downward trend, declining 1.1% as timber and crop production both faltered. Softness in global lumber markets and sawmill cutbacks pushed forestry activity to record lows during the November period.

Early data for December suggests a slight 0.1% uptick, though the broader quarterly outlook remains characterized by inertia. These figures suggest the Canadian economy likely contracted 0.1% in the final quarter, bringing total annual growth for 2025 to 1.3%.

"Overall today’s data are unlikely weak enough to revive talks for further interest rate cuts by the Bank, but it is clear that rates will need to be held at stimulative levels for a while to drive a recovery amid the continued uncertain economic environment," asserted CIBC economist Andrew Grantham shortly after the data release.

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