Canada’s economy rebounded in the second quarter of 2026, with real gross domestic product rising 0.8%, Statistics Canada said on Friday, as higher exports, household spending and business investment supported growth.
The increase followed a 0.1% gain in the first quarter, revised up from the previously reported 0.0%. On a per-capita basis, real GDP rose 1.0% in the second quarter as Canada’s population declined for a third consecutive quarter.
Exports increased 3.6%, their strongest quarterly gain since the first quarter of 2023. Passenger cars and light trucks led the advance, rising 27.0% as Canadian auto production rebounded following declines in the previous two quarters. Exports of intermediate metal products, energy products and industrial machinery and equipment also increased.
Imports rose 0.3%, following a 3.1% gain in the first quarter. Higher imports of tires, motor vehicle engines and vehicle parts, basic chemicals, and computers and peripherals were partly offset by lower imports of intermediate metal products.
Residential investment rebounded 2.5% after two consecutive quarterly declines. All components increased, with ownership transfer costs recording the largest gains in Ontario, Quebec and British Columbia. New construction rose 0.8%, supported by apartment construction in British Columbia.
Business capital investment also increased, with engineering structures rising 2.3% after two quarters of declines. Spending on machinery and equipment reached its highest level since the second quarter of 2024. Investment in computers and peripherals climbed 16.7%, driven largely by higher imports of processing units, including equipment used in data centres.
Household final consumption expenditure rose 0.8%, supported by spending on mutual funds and other investment services, passenger vehicles and rent. Households reduced spending on gasoline and food, which Statistics Canada noted was likely in response to higher prices.
Businesses, meanwhile, drew down inventories by $17 billion in the second quarter after accumulating $10.0 billion in the first quarter. Manufacturers recorded the largest inventory withdrawals, followed by wholesalers and farm operators.
The GDP deflator increased 2.5%, its largest quarterly rise since the second quarter of 2022. Export prices rose 6.5%, following higher international oil prices, while import prices increased 3.2%. The terms of trade consequently rose 3.3%.
Compensation of employees increased 1.5%, with gains across all provinces and territories. Corporate incomes rose 9.6%, the strongest increase since the first quarter of 2021, led by higher energy-sector surpluses.
Household disposable income increased 2.1%, outpacing the 1.7% rise in nominal spending and lifting the household saving rate to 3.7%. The increase in disposable income was supported by higher wages and salaries and increased government transfers, including a one-time GST/HST credit top-up paid in June.