Rosenberg Research Says Canada's Economy Is "On Life Support"

09:38 AM EST, 02/02/2026 (MT Newswires) -- Rosenberg Research has published a note Monday that includes a section entitled 'Canadian Economy on Life Support'.

This comes after Friday's monthly Canadian gross domestic product release showed a flat reading in November, following what the research termed a "depressing" industry jobs report on Thursday.

Rosenberg Research noted the flat monthly GDP number failed to meet the consensus around a 0.1% month-over-month uptick, and was on top of the "discouraging" 0.3% month-over-month drop in October. It also noted the Statistics Canada advance estimate for December showed a "minuscule" 0.1% month-over-month print, which means that the Canadian economy is expected to "shrink outright" in Q4, falling by 0.5% on a quarter-over-quarter annualized basis -- worse than the Bank of Canada's forecast of a 0.0%.

That would mean the economy shrank in two of the last three quarters -- putting the economy on a clear recession watch for 2026, the research said.

Now that GDP growth has been flat or negative in six out of the past eight months, Rosenberg Research noted, it took the year-over-year trend down to a "measly" 0.6% growth pace, from 2.3% a year ago and 1.3% six months ago. It added: "There has practically been no growth since the turn of the year, with the level being the same as it was in January, which makes us wonder whether the BoC really should've moved to the sidelines on Wednesday."

Looking beneath the headline, Rosenberg said, there was an "even softer underbelly" to this report, added Rosenberg. Goods-producing industries (-0.3% MoM) more than offset any gains from services (+0.1%), while industrial production "tumbled" by -0.4% (falling in six out of the past eight months).

The research noted rate-sensitive sectors of the economy, such as manufacturing and construction, have displayed ongoing weakness, with manufacturing crumbling by 1.4% month over month -- negative for the second month in a row -- and down in three out of the past four months -- while construction somehow showed a 0.2% increase, although this didn't recoup the decays from September (-0.1%) and October (-0.3%) combined.

Despite the cumulative -275 basis points of rate relief since June 2024, the manufacturing sector has been on nearly a two-year losing streak on a year-over-year basis, and is "currently plummeting" by the most (4.9% year over year) since August 2020, according to Rosenberg.

If Canada gets GDP growth continuing on this trend, and it comes in close to flat or in the red for Q1 2026, it's hard to see anything other than renewed BoC rate cuts, the research said.

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