Rosenberg Research Sees Bank of Canada Continuing Easing in 2026

09:03 AM EST, 12/29/2025 (MT Newswires) -- Canadian real gross domestic product contracted by 0.3% month over month in October, as expected, said Rosenberg Research after last week's GDP release.

The really big disappointment came from the various components, as the weakness transcended economic disruptions from strike-related activity in the civil service and maintenance dislocation in the resource sector, noted Rosenberg Research.

There were no special factors behind the 1.5% month-over-month setback in manufacturing production or the 0.4% month-over-month pullback in construction spending. Or the fact that the retail trade sector contracted by 0.6% and has been down now in three of the past four months -- speaking to a soft consumer even with the apparent strength in the labor market of late.

Tack on the 1.1% drop in transportation services, and Rosenberg sees that the cyclical components in the local economy softened materially during the month -- and this has actually been a pattern since June, despite the Bank of Canada's support moves, which Rosenberg doesn't believe is over.

After all, considering the lack of any revival in November with Statistics Canada showing a tepid 0.1% month-over-month recovery, the country is set for Q4 as a whole to come in negative at 0.6% annualized, added Rosenberg. The year-over-year trend in Canadian real GDP has throttled back to a "microscopic" 0.4% year-over-year increase pace, from 1.1% in September and 2.8% a year ago -- despite the BoC's aggressive rate cuts, the Canadian economy in its entirety is barely growing, and is falling well short of even the depressed pace of aggregate supply -- which only leads to one conclusion which is a disinflationary outcome.

Canada may well have avoided an unmitigated disaster from United States President Donald Trump's tariff file, but it's "abundantly clear" that there remains an uncomfortably high level of uncertainty that is holding the economy back -- that 0.4% year-over-year increase real GDP trend, as an aside, is the weakest since February 2021, when Canada was crawling out of the pandemic recession, it added.

Yet, the consensus on Bay Street is that the BoC will be on hold all of next year. This economy needs a "lot more" help, pointed out Rosenberg.

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