The Canadian economy recorded a 0.3% decline in real GDP in August, with Statistics Canada reporting that third-quarter growth was virtually unchanged. The goods sector continued to weaken, while the services sector recorded its first decline in six months.
StatCan said the August decline nearly wiped out a 0.3% gain in July. A layoff at Air Canada was the main factor, causing the air transportation subsector to fall 4.6%, the biggest drop since the COVID-19 pandemic.
Wholesale trade and mining and quarrying also fell, but growth in retail trade helped offset some of the decline. The manufacturing industry, which is sensitive to U.S. tariffs, shrank 0.5% but is expected to recover slightly in September.
Preliminary estimates show September GDP rising 0.1%, supported by the manufacturing, financial, and mining sectors. However, weakness in wholesale and retail trade continues to weigh on overall growth.
Overall, StatCan estimates third-quarter annual growth of around 0.4%, slightly below the Bank of Canada's forecast. This follows a 1.6% contraction in the second quarter due to a drop in exports driven by US tariffs.
