RBC Sees 0.5% Q3 GDP Growth for Canada Ahead of Friday Data

06:12 AM EST, 11/24/2025 (MT Newswires) -- Canada will publish September and Q3 gross domestic product data on Friday, said RBC.

The bank expects the Canadian economy to grow an annualized 0.5% in Q3 -- a partial reversal of the 1.6% decline in Q2 when international trade disruptions plunged exports lower.

Friday's Q3 GDP appears backloaded with what RBC expects will be a 0.3% month-over-month bounce-back in September after a surprise 0.3% contraction in August. That is firmer than the 0.1% month-over-month preliminary estimate from Statistics Canada, but consistent with further acceleration in growth in Q4.

Heavily trade-exposed industries continued to broadly underperform in Q3, but have shown further signs of stabilization, noted the bank. Manufacturing and wholesale sales volumes rebounded by an annualized 6.5% in Q3 to partially reverse large declines (-11.7% and -9%, respectively) in Q2.

Offsetting weakness in the trade-exposed sectors is domestic Canadian demand that has remained relatively resilient so far, stated the bank. Business investment likely contracted in Q3, but RBC's card transactions point to further, although slower growth in consumer spending after a large increase in Q2. Residential investment is expected to have risen again in Q3, following a gradual pick-up in home resales since March.

Net international trade data through August is on pace to add slightly to growth in Q3 after record subtraction from Q2 GDP (outside 2020 pandemic lockdowns) when exports plunged on lower shipments to the United States.

Canadian international trade data for September is still missing. StatsCan relies on the United States Census Bureau for information on Canadian exports to the U.S. which has been delayed by the six-week U.S. government shutdown. As such, it's likely the quarterly Canadian trade data in the GDP add-up will include imputations and could see larger-than-normal revisions in the future.

Overall, early indicators for monthly September GDP have been positive, added RBC. Manufacturing sales volume jumped 2.7% -- the largest one-month increase since January 2023. Oil production increased almost 3% in September by the bank's estimates, and is on track to add positively to Q3 GDP growth after wildfires and Q2 maintenance-related disruptions dampened oil sands production.

Air transportation also contributed to GDP growth in September after a strike in August temporarily weighed on output. Soft spots for growth in September include retail sales volume, which pulled back 0.8%, and mining output (excluding oil and natural gas), which by RBC's count, edged lower for a second straight month.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.