CIBC Says Canadian GDP Data Leaves Q4 in Slight Contraction; Adds Bank of Canada Unlikely to Cut Rates on Current Economic Weakness

08:59 AM EST, 01/30/2026 (MT Newswires) -- The Canadian economy was still struggling for growth toward the end of Q4, with November gross domestic product showing a flat reading and the advance estimate for December pointing to only marginal growth, said CIBC after Friday's data.

The flat reading for November was slightly weaker than the advance and consensus estimate of a 0.1% month-over-month rise, but not a huge surprise given subsequent industry data showing weakness in the wholesale sector, noted the bank.

Manufacturing also weighed on activity during the month, and combined with the decline in wholesaling, offset rebounds in areas such as education and transportation that were negatively impacted by strike activity in the prior month.

The advance estimate for December pointed to a 0.1% month-over-month increase in activity, with Statistics Canada suggesting that this was driven by at least partial recoveries in manufacturing and wholesaling, stated CIBC.

Friday's report leaves Q4 GDP showing a slight contraction of 0.5% annualized, which is a little weaker than the Bank of Canada's recent Monetary Policy Report projection but not overly concerning, given the typical degree of divergence between the industry data and next month's expenditure figures, pointed out the bank.

That said, the still sluggish momentum toward quarter end may be a concern, as monthly growth rates will need to accelerate for the economy to achieve the BoC's near 2% MPR forecast for Q1, added the bank.

Overall, Friday's data is unlikely to be weak enough to revive talks for further interest rate cuts by the BoC, but it's clear that rates will need to be held at stimulative levels for a while to drive a recovery amid the continued uncertain economic environment, according to CIBC.

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