Canada GDP Contracts in Q2

The Canadian GDP declined by 0.4% from the previous quarter in the second quarter of 2025, reversing the 0.5% gain from the earlier period.

The quarter’s outcome reflected a sharp fall in exports and weaker business investment in machinery and equipment, partially offset by faster inventory accumulation and stronger household spending.

Exports of goods and services declined 7.5%, while imports fell 1.3%.

In the meantime, business non-farm inventories accumulated at a much faster pace, adding $30.1 billion to GDP.

Still, household spending strengthened (1.1% vs 0.1% in Q1), even as corporate incomes and investment softened and federal revenues fell; government expenditures rose 1.8% in the quarter.

On an annualized basis, the Canadian GDP contracted by 1.6%, well below expectations of a 0.6% contraction.