Scotiabank Sees Canada Q3 GDP Tracking Below 1% as Investors Await Key Monthly Data

10:28 AM EDT, 09/22/2025 (MT Newswires) -- Canada's economic picture will come into sharper focus Friday when a pair of monthly gross domestic product reports provide a clearer view of third-quarter growth, Scotiabank said.

The update follows a mixed second quarter in which GDP contracted because of trade and inventory effects even as domestic activity strengthened on robust consumer spending, the bank

noted.

Friday's release will include the final July estimate, adding details not in the preliminary figure, and a first estimate for August GDP.

Statistics Canada previously guided that July GDP edged up 0.1% month over month, with strength in real estate, mining and quarrying, and wholesale trade partly offset by weakness in retail. Scotiabank expects the final number to stay soft.

Hours worked fell 0.2% in July on a seasonally adjusted basis, meaning only a surge in productivity could produce stronger growth, and high-frequency indicators don't suggest that occurred.

August GDP may look slightly firmer. Hours worked rose 0.1% after a 0.2% drop, while retail likely added modestly to growth. Housing data were mixed: starts eased, but earlier gains in homes under construction and another increase in resales may continue to lift related services such as legal and mortgage activity.

Overall, Scotiabank estimates Q3 GDP is running at under 1% growth quarter over quarter at a seasonally adjusted annualized rate based on production-side data.

Expenditure-based accounts, the preferred gauge for many forecasters, could show slightly stronger growth if export volumes stabilize after several volatile quarters.

While GDP is an important input, Scotiabank said the Bank of Canada will also weigh upcoming factors such as the federal budget on Nov. 4 and the early stages of CUSMA/USMCA trade-deal renegotiations in shaping policy.

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