A preliminary estimate shows that Canada’s real Gross Domestic Product (GDP) decreased 0.1% in both April and May of this year as U.S. import tariffs and declining consumer sentiment impacted the economy.
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The April contraction in Canada’s economic activity comes as goods-producing industries declined 0.6%, with the manufacturing sector accounting for nearly all of that drop. Durable goods manufacturing (-2.2%) was down for the first time in four months as 8 of 10 subsectors contracted.
Wholesale trade contracted 1.9% in April, recording the largest monthly decline since June 2023, as activity subsided in seven of nine subsectors. Motor vehicle and motor vehicle parts (-6.8%) were the largest drag on growth, as exports and imports of such products dropped sharply due to U.S. tariffs.
News of the GDP contraction is weighing on leading Canadian stocks such as Shopify (SHOP), Canada Goose (GOOS), and Restaurant Brands International (QSR).
Entering a Recession
The latest data reinforces that Canada’s economy has been slowing in recent months as U.S. import tariffs on Canadian goods rattle industry and shake consumer confidence. Canada is among the country’s expected to be hardest hit by U.S. President Donald Trump’s tariff regime given its close proximity to America and the economic integration of the two countries.
The April and May contractions also raise the odds that Canada might be headed for a recession this year. The economic slowdown has increased the odds that the Bank of Canada will further cut interest rates at its next policy meeting on July 30. Inflation in Canada is currently at an annualized 1.7%, which is below the central bank’s 2% target.
Is GOOS Stock a Buy?
The stock of Canada Goose has a consensus Moderate Sell rating among nine Wall Street analysts. That rating is based on five Hold and four Sell recommendations issued in the last three months. The average GOOS price target of $10.98 implies 5.59% downside risk from current levels.
