TORONTO: Economist David Rosenberg of Rosenberg Research has warned that Canada’s economy is “on life support” and that the country is on “recession watch,” as recent official data shows growth losing momentum late in 2025 despite lower interest rates. Statistics Canada reported that real gross domestic product by industry was essentially unchanged in November 2025 after a 0.3% decline in October. The agency’s advance estimate indicated GDP rose 0.1% in December, a preliminary reading that will be updated with the official release later this month.
The November stall reflected weakness in goods producing industries that offset gains in services. Manufacturing contracted in November, alongside declines in agriculture, forestry, fishing and hunting. Services posted modest growth, with expansions that included retail trade, educational services, and transportation and warehousing, underscoring a mixed picture across sectors.
The Bank of Canada held its target for the overnight rate at 2.25% on Jan. 28, keeping the Bank Rate at 2.5% and the deposit rate at 2.20%. The central bank said the outlook for Canada and the global economy remained vulnerable to unpredictable U.S. trade policies and geopolitical risks. The policy rate is sharply lower than the 5% level the bank maintained in early 2024.
Growth Stalls As Labour Market Softens
Canada’s labour market showed signs of cooling at year end. Statistics Canada’s Labour Force Survey reported the unemployment rate rose 0.3 percentage points to 6.8% in December 2025 as more people searched for work, while employment was little changed with a net gain of 8,200 jobs and the employment rate held at 60.9%.
Inflation remained near the central bank’s 2% target but picked up in December. Statistics Canada said the Consumer Price Index rose 2.4% year over year in December 2025, up from 2.2% in November. The CPI fell 0.2% from November on a monthly basis, while excluding gasoline the CPI increased 3.0% year over year, with gasoline prices down 13.8% from a year earlier.
Canada’s quarterly data showed volatile growth through 2025. Statistics Canada reported real GDP rose 0.6% in the third quarter after falling 0.5% in the second quarter. The third quarter increase was driven by a strengthening trade balance as imports fell and exports edged up, while growth was dampened by declines in household and government final consumption expenditures.
Trade And Housing Add To Strain
External demand also weakened late in the year. Statistics Canada said Canada’s merchandise exports fell 2.8% in November while imports edged down 0.1%, widening the country’s trade deficit with the world to C$2.2 billion from C$395 million in October. Service exports slipped 1.5% to C$19.8 billion and service imports rose 0.5% to C$19.8 billion, leaving the combined goods and services balance in deficit.
Housing indicators pointed to continued uneven conditions. The Teranet National Bank Composite Home Price Index fell 3.5% between December 2024 and December 2025, with gains in several cities and declines in others, including Toronto and Hamilton. Statistics Canada is scheduled to publish updated official GDP by industry data for December on Feb. 27, alongside broader quarterly figures that will provide a clearer read on the economy’s trajectory entering 2026. – By Content Syndication Services.