Canada’s economy returned to growth in the third quarter of 2025, with real gross domestic product up 0.6% compared to new data released by Statistics Canada on Friday.
The increase follows a 0.5% decline in the previous quarter and reflects a rebound driven primarily by trade and higher government capital spending.
On an annualized basis, GDP grew 2.6%, exceeding forecasts of a 0.5% increase on an annualized basis from both the Bank of Canada and private-sector economists.
According to the agency, the recovery was led by a stronger trade balance. Imports fell 2.2%, the largest decline since late 2022, while exports edged up 0.2% thanks to higher shipments of crude oil and crude bitumen. Weaker imports helped lift overall output despite only slight export gains.
Government capital spending also supported growth, rising 2.9% in the quarter, largely due to an increase in spending on weapon systems and institutional buildings.
Business investment was flat overall as gains in residential and engineering structures were offset by lower spending on machinery, equipment and non-residential buildings.
The housing market added to growth mainly through resale activity, with ownership transfer costs rising 9.1%. New home construction, however, edged down 0.8%.
Household consumption was a drag on the quarter, slipping 0.1% as vehicle purchases declined. Government consumption also fell for the first time since 2023.
Statistics Canada noted that the Q3 figures may be subject to larger revisions than usual due to temporary gaps in US customs data resulting from a government shutdown.
Preliminary estimates suggest real GDP contracted 0.3% in October, indicating a softer start to the fourth quarter ahead of the Bank of Canada’s next scheduled interest rate decision on December 10.