CIBC Notes Canadian Economy Was "Starting To Struggle Again" In October, and November Points To "Only a Partial Recovery"

09:02 AM EST, 12/23/2025 (MT Newswires) -- The Canadian economy was "starting to struggle again" in October, and the picture only looked marginally better the following month, according to Andrew Grantham at CIBC.

Grantham on Tuesday noted October GDP posted a 0.3% decline in October, which was in line with the consensus forecast and advance estimate. He noted some one-off factors contributed to that decline, including strike action by Alberta teachers that drove a 1.8% decline in the education sector as well as disruptions to postal services also reflecting strike action. Also, maintenance work at oil sands facilities contributed to a decline in the mining, oil & gas sector. And there was broad-based weakness in some other industries as well, including declines in manufacturing, wholesale and retail.

The advance estimate for November pointed to only a partial recovery of 0.1%, even after accounting for rebounds in strike-impacted sectors, Grantham said.

Grantham noted today's data leaves Q4 GDP tracking a modest contraction of 0.5% annualized, signaling a further increase in slack within the economy which will dampen bets for interest rate hikes in 2026. However, he said, following the upside surprise in headline GDP seen in the third quarter, average growth for the second half of the year is still slightly better than October's MPR assumptions (1.0% vs 0.75%), and as a result this weaker momentum will have to continue into the New Year to reawaken talk of interest rate cuts. CIBC continues to forecast no change to the Bank's overnight rate in 2026.

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