Canada's Economy Stumbles: August GDP Contraction Sparks Recession Concerns

Canada's economic performance saw an unexpected downturn, as GDP contracted by 0.3% in August, according to data released on Friday. The surprise shrinkage defied predictions of zero growth, casting doubts on economic resilience.

While the services and goods sectors experienced significant downturns, an advance estimate projects a 0.1% GDP increase for September, potentially leading to a 0.4% annualized growth for the third quarter. However, this falls short of the Bank of Canada's 0.5% growth forecast, raising concerns over recession risks.

The manufacturing industry, already strained by U.S. tariffs, showed a 0.5% contraction. Mining and extraction industries faced a 0.7% decline, with metal ore and coal significantly impacted. Despite these setbacks, growth in retail trade, real estate, and leasing mitigated some service sector declines.