GDP flat in August, early September read points to contraction

Canada’s economy flatlined in August – real GDP changed by 0.0%, the second straight month of little change – and Statistics Canada’s early estimate points to a 0.1% contraction in September, implying the economy grew just 0.3% across the third quarter, per the agency’s Friday release.

The August figure also came in below expectations: StatCan’s advance estimate had pointed to a 0.2% gain, and RBC Economics had pencilled in 0.1% for the month (with a projected 1.8% pace for Q3 as a whole – a figure the September slip now makes harder to reach). Nine of 20 industrial sectors expanded.

What grew, what shrank

The winners: retail trade rose 1.2% (led by motor vehicle and parts dealers), rail transportation jumped 3.6% – its largest monthly gain since March 2025 – and mining excluding oil and gas surged 4.9%, on a 12% potash increase and a 56.2% jump in other metal ore mining. Manufacturing edged up 0.3%.

The drags: wholesale trade fell 1.4% (motor vehicle wholesalers down 4.4%), oil and gas extraction slipped 1.2% with oil sands down 2.1%, the federal public administration shrank 2.1%, and utilities eased 0.4%. Services-producing industries as a whole edged down 0.1%.

Why it matters after Wednesday’s rate hike

The stall lands three days after the Bank of Canada’s 2.50% hike on October 28 – its first increase in more than three years, which RBC characterized as driven by inflation risks from higher energy prices rather than any urgency about growth, and as likely to slightly raise the odds of a Q4 slowdown in interest-sensitive sectors like housing. The Bank’s decision was made with only an advance estimate of August in hand – today’s final reading confirms the economy was actually flat, and the September early estimate shows it slipping further.

Next milestones: official September GDP figures arrive November 30, and the Bank’s next rate announcement is December 9 – the last of 2026.

Sources: Statistics Canada, The Daily (Oct 30, 2026) and RBC Economics.