Canada's GDP Likely to Extend Softness Through Q3/Q4, Says Scotiabank

07:55 AM EST, 11/28/2025 (MT Newswires) -- Canada will report gross domestic product for Q3, detailed figures for September and the preliminary estimate for October at 8:30 a.m. ET on Friday, said Scotiabank.

The bank expects "soft" numbers. That may spark market volatility, but the Bank of Canada is focused on complex drivers of inflation that trade off spare capacity and rising cost pressures with a clear signal it's on an extended hold.

Q3 growth is likely to land around 0.5% quarter-over-quarter seasonally adjusted annual rate (SAAR) on an expenditure-accounts basis that fully accounts for net trade and inventory effects, stated Scotiabank. That's basically stall speed.

The bank's ability to estimate Q3 growth is limited by virtue of the fact that it's still missing trade figures from September due to the United States government shutdown and its effects on Statistics Canada. Inventory figures are also incomplete.

As a consequence, one should treat the estimates with wider brackets than normal and with higher revision risk than normal once StatsCan more fully assesses the trade picture, pointed out Scotiabank.

Still, anything around that reading wouldn't surprise the BoC. It forecast 0.5% Q3 growth in the October Monetary Policy Report.

As for the monthly data, StatsCan had previously guided that September would be tracking at about 0.1% month-over-month seasonally adjusted (SA). The bank bumped that up a bit to 0.2% given the data since that guidance.

Hours worked fell in each of September and October by 0.2% month-over-month SA, partly because of the Canada Post strike from about late-September to mid-October, and the Alberta teachers strike, added Scotiabank. Both of those strikes carried direct and indirect effects.

It will be important to assess growth independent of estimated impacts.

Other readings appeared weak for October on balance, including preliminary estimates. That could leave the bank tracking another very soft quarter in Q4 on a highly tentative basis.

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