Canada posts stronger than expected economic growth in third quarter

Canada’s economy regained momentum over the summer months, with new federal data showing a 2.6 per cent annualized increase in real gross domestic product during the third quarter. Statistics Canada’s latest release indicates the rebound was considerably stronger than forecasts from the Bank of Canada and private sector economists, many of whom expected only modest growth.

The agency reports that a sharp drop in imports combined with slightly higher exports helped strengthen the country’s trade position. Federal capital spending – including major procurement of new military equipment – also added to overall output during the quarter.

Those gains were tempered by weaker household spending and reduced construction activity, both of which continue to reflect higher borrowing costs and affordability pressures faced by Canadian families. The mixed picture is being watched closely by policymakers, including in British Columbia and Alberta, where housing and consumer demand play a significant role in economic stability.

The quarterly numbers follow a 1.8 per cent contraction in the spring, when U.S. tariffs weighed on several Canadian industries. Statistics Canada says September posted small growth of 0.2 per cent, but its early estimate for October suggests the economy may have started the fourth quarter with a 0.3 per cent decline.

Economists in Western Canada say the uneven trend underscores the need to monitor how global trade conditions and domestic interest rates will shape the coming months, particularly for regional exporters and local labour markets.