Flat August GDP Complicates Bank of Canada's Rate Hike Case, Say Economists

11:33 AM EDT, 10/30/2026 (MT Newswires) -- August GDP was flat on the month, pulled down by declines in public administration and wholesale trade. The weaker underlying growth also complicates the case for further rate hikes by the Bank of Canada. Statistics Canada's advance estimate for September also pointed to a 0.1% decline in GDP. For the third quarter as a whole, Friday's data suggested growth of 1.3% annualized, missing the 2% forecast from the Bank of Canada in this week's monetary policy report, wrote CIBC Senior Economist Andrew Grantham. TD's Economist Marc Ercolao said in a Friday note that, despite the Bank of Canada anticipating a strengthening in growth next year, trade uncertainty and higher energy costs, along with weaker growth heading into the final quarter, were clouding the outlook. Still, robust retail activity suggested that household spending remained resilient despite higher borrowing and energy costs, wrote RBC Economist Abbey Xu, adding that manufacturing and construction output also increased while engineering construction posted another gain.