Canada’s Gross Domestic Product (GDP) on a month-over-month (MoM) basis rose by 0.10% in October 2025, according to the latest release from the Sigmanomics database. This figure outperformed the consensus estimate of -0.10% and followed a 0.20% increase in September, signaling a modest but meaningful rebound in economic activity.

Drivers this month

• Manufacturing output increased by 0.30%, supported by stronger domestic demand.
• Services sector growth contributed 0.20%, led by finance and real estate.
• Energy sector remained flat, reflecting global price volatility and supply constraints.
• Construction activity edged down by 0.10%, weighed by higher borrowing costs.

Policy pulse

The Bank of Canada has maintained a cautious stance, keeping the policy rate steady at 5.25% amid persistent inflation above the 2% target. The latest GDP print suggests the economy is stabilizing but not accelerating, which supports a wait-and-see approach to further tightening.

Market lens

Immediate reaction: The Canadian dollar (CADUSD) strengthened 0.30% in the first hour post-release, while 2-year government bond yields rose 5 basis points, reflecting improved growth expectations. Breakeven inflation rates held steady near 2.30%, indicating stable inflation outlooks.

Core macroeconomic indicators provide context for the GDP reading. The 0.10% MoM growth in October compares favorably to the -0.30% contraction recorded in August and the flat reading in June. Over the past 12 months, Canada’s average monthly GDP growth has hovered around 0.15%, indicating the current print is slightly below trend but positive relative to recent volatility.

Monetary Policy & Financial Conditions

Monetary tightening since early 2025 has increased borrowing costs, with the overnight rate rising from 3.50% in January to 5.25% currently. Credit growth has slowed, particularly in housing and consumer loans, which has dampened construction and retail sectors. Financial conditions remain moderately restrictive but have not yet tipped the economy into recession.

Fiscal Policy & Government Budget

Federal fiscal policy remains neutral, with limited new stimulus measures. The government’s budget surplus narrowed to 0.50% of GDP in Q3 2025, constraining expansionary spending. Infrastructure investments continue but at a measured pace, supporting medium-term growth without overheating the economy.

External Shocks & Geopolitical Risks

Global trade tensions and energy market volatility have weighed on exports. The recent slowdown in U.S. demand, Canada’s largest trading partner, poses downside risks. Geopolitical uncertainties in Eastern Europe and Asia add to market jitters, affecting commodity prices and investment flows.

Market lens

Immediate reaction: CADUSD rose 0.30%, reflecting improved growth sentiment. The 2-year bond yield climbed 5 basis points, while breakeven inflation rates remained stable, signaling balanced inflation expectations.

Looking ahead, Canada’s economic trajectory depends on several factors. The baseline scenario projects steady GDP growth of 0.10–0.20% MoM over the next quarter, supported by stable domestic demand and moderate inflation. The Bank of Canada is likely to maintain current rates, awaiting clearer inflation signals.

Bullish scenario (25% probability)

• Stronger-than-expected U.S. demand boosts exports.
• Energy prices stabilize, supporting resource sectors.
• Fiscal stimulus accelerates infrastructure spending.
• GDP growth accelerates to 0.30% MoM or higher.

Base scenario (50% probability)

• GDP growth remains modest at 0.10–0.20% MoM.
• Monetary policy steady, inflation near target.
• External risks contained but persistent.
• Gradual improvement in labor markets and consumer confidence.

Bearish scenario (25% probability)

• Global slowdown depresses exports and investment.
• Energy sector weakness deepens.
• Financial conditions tighten further, slowing credit.
• GDP contracts or stagnates in coming months.

Canada’s October 2025 GDP MoM reading of 0.10% signals a fragile recovery amid tightening monetary policy and external uncertainties. While core sectors show resilience, risks from geopolitical tensions and financial conditions remain. Policymakers face a delicate balance between curbing inflation and supporting growth. Market participants should monitor upcoming inflation data and global trade developments closely.

Overall, the data suggest cautious optimism but underscore the need for vigilance in navigating evolving macroeconomic challenges.

Key Markets Likely to React to Gross Domestic Product MoM

The Canadian GDP MoM release typically influences several key markets. The CADUSD currency pair often reacts strongly, reflecting shifts in growth expectations and monetary policy outlook. The TSX index tracks domestic economic health, especially resource and financial sectors. Fixed income markets, represented by the CGB (Canadian Government Bonds), respond to growth and inflation signals. Commodity-linked assets like BTCUSD show indirect correlations through risk sentiment. Lastly, the USDCAD pair provides an inverse perspective on the Canadian dollar’s strength.

FAQs

What is the latest Canada GDP MoM figure?

The most recent GDP MoM growth for Canada is 0.10% for October 2025, indicating modest economic expansion.

How does this GDP reading affect monetary policy?

The positive but modest GDP growth supports the Bank of Canada’s current cautious stance, with no immediate rate changes expected.

What are the main risks to Canada’s economic outlook?

Key risks include global trade slowdowns, energy price volatility, and tighter financial conditions that could dampen growth.

Takeaway: Canada’s economy shows tentative signs of stabilization, but persistent external and domestic headwinds require careful policy calibration and market vigilance.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.