Canada’s economy contracted in the final quarter of 2025 and barely registered any growth to start this year as U.S. tariffs continue to impact businesses and consumers.
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Forget margin or options. Here's how the pros trade QQQData from Statistics Canada shows that the economy contracted 0.5% on an annualized basis in the final three months of last year. Real gross domestic product (GDP) increased a tepid 0.1% in January. However, the overall economy remains weak following a year of tariffs imposed by the neighboring U.S.
Looking ahead, the statistical agency said that its preliminary estimate for February suggests Canada’s economy grew 0.2% during that month, though it cautioned that the figure would be revised in coming weeks. The sluggish economy is weighing on leading Canadian stocks such as Shopify (SHOP), Lululemon Athletica (LULU) and Restaurant Brands International (QSR).
Canada’s Manufacturing Sector Takes a Hit
Statistics Canada said that it anticipates that the economy will prove to be relatively flat for this year’s first quarter. Much of the stagnant growth is due to a downturn in manufacturing across the country. Canada’s manufacturing sector contracted 1.4% in January due to weaknesses in durable goods.
The sluggish economy could influence the Bank of Canada’s next interest rate decision scheduled for April 29 of this year. The central bank held its trendsetting overnight interest rate at 2.25% on March 18 and signaled it was taking a wait-and-see approach to how the Iran war and higher oil prices are impacting Canada’s economy.
Is LULU Stock a Buy?
Lululemon Athletica’s stock has a consensus Hold rating among 21 Wall Street analysts. That rating is based on one Buy and 20 Hold recommendations issued in the last three months. The average LULU price target of $182.41 implies 22% upside from current levels.
