Canada’s Economy Grows 3.3% in Q2, Fastest Pace in Three Years

Second Quarter Growth Figures and Revisions

Gross domestic product reached 2.524 trillion Canadian dollars—equivalent to $1.822 trillion U.S. dollars—during the April-to-June period, according to Statistics Canada. The agency also revised first-quarter growth upward to 0.3%, recovering from an initially estimated slim contraction of 0.1% and a 1% drop in gross domestic product during the final quarter of 2025. On a per capita basis, Canada’s economy grew by 3.8% at annual rates following a 1.3% advance in the first quarter, as the country’s population declined for a third quarter. Final domestic demand, which measures spending across all sectors, rose at a nonannualized rate of 1% during the second quarter after showing no change in the first three months of the year.

Exports, Business Investment, and Household Spending

Canadian exports jumped 3.6% in the second quarter, marking the largest increase since the first quarter of 2023. That advance was led by a surge in shipments of passenger cars and light trucks following a recovery in automotive production, alongside gains in energy, metal products, and industrial machinery. Imports rose by 0.3%, slowing down significantly from a 3.1% increase in the first quarter. Business investment turned positive with increased spending on machinery, equipment, and engineering structures, breaking a streak of two consecutive quarters of declines. However, businesses drew down their inventories during the quarter, stripping 1.3 percentage points from gross domestic product after a large build-up of stocks in the previous period. Manufacturers led the inventory withdrawals, followed by wholesalers and farm operators. Household spending grew for the third quarter, propelled by purchases of mutual funds, other investments, passenger cars, and rent. At the same time, consumers cut back on gasoline and food spending as pump prices spiked and grocery costs stayed elevated. Residential investment also climbed after falling for two quarters, supported by rising resale housing activity and construction.

Incomes, Savings, and Upcoming Interest Rate Decisions

Employee compensation climbed 1.5% in the second quarter, fueled by higher wages in finance, real estate, company management, and trade. The household savings rate rose to 3.7% as disposable income growth outpaced nominal spending. Meanwhile, corporate incomes jumped 9.6% for the largest increase since the first quarter of 2021, driven primarily by the energy sector as crude oil prices climbed. Monthly income-based figures showed a third straight month of gross domestic product growth with a 0.3% increase in June, slightly beating the 0.2% expansion economists had expected. An advance estimate for July indicates economic activity was essentially unchanged for the month. The latest gross domestic product report serves as the final major economic indicator ahead of the Bank of Canada’s interest rate decision scheduled for the following week.