Canada Economy News Today (December 3, 2025): Big Bank Earnings, Cooling Housing and a Cautious Bank of Canada

Canada’s economy is sending mixed signals this Wednesday, December 3, 2025. Big banks are reporting strong profits and raising dividends, the stock market is hovering near record highs, but the housing market – especially in Toronto – is clearly soft, and the Bank of Canada is in no rush to cut interest rates further.

Here’s a full look at today’s key developments for the Canadian economy.

1. Big Banks Deliver Strong Earnings and Bigger Dividends

Royal Bank of Canada posts record year

Royal Bank of Canada (RBC), the country’s largest lender and a heavyweight on the TSX, reported its fourth‑quarter and full‑year 2025 results this morning.

According to RBC’s news release and companion market summaries, the bank generated net income of about C$20.4 billion in fiscal 2025, an increase of roughly 25% from last year, with diluted earnings per share rising to C$14.07, also up 25% year over year. ^[1]

RBC pointed to broad‑based growth across its businesses, including capital markets, wealth management and traditional retail banking. The bank also announced an increase to its quarterly dividend, signalling confidence in its capital position and earnings outlook. ^[2]

For the broader economy, RBC’s results matter because:

It is a bellwether for credit demand, household finances and corporate deal activity.
Strong profits and higher dividends feed into Canadian household income via pensions and direct share ownership.
Robust capital levels give the banking system more room to absorb future loan losses if the economy slows.

National Bank of Canada: solid growth and a higher payout

National Bank of Canada also released its fourth‑quarter and full‑year numbers this morning. The Montreal‑based lender reported Q4 net income of C$1.06 billion, up about 11% from a year earlier, and full‑year net income of C$4.0 billion, up around 5%. ^[3]

On an adjusted basis – stripping out certain one‑off items – earnings grew more quickly:

Adjusted Q4 net income rose about 25% year over year to C$1.16 billion.
Adjusted full‑year net income increased roughly 21% to C$4.48 billion. ^[4]

The bank highlighted stronger income before provisions for credit losses and income taxes, as well as the successful integration of its recently completed acquisition of Canadian Western Bank, described as the largest in its history. ^[5]

National Bank’s board also raised its common share dividend by six cents to C$1.24 per share, another sign that management is comfortable with its capital buffers and earnings trajectory. ^[6]

Scotiabank’s earnings momentum carries into today’s trade

While Bank of Nova Scotia (Scotiabank) reported its results yesterday, they remain part of today’s story. The bank kicked off the Big Six earnings season with a higher fourth‑quarter profit that beat analyst expectations, even after booking a restructuring charge tied to layoffs. Strength in wealth management and capital markets offset ongoing headwinds in its core Canadian banking franchise. ^[7]

A separate set of press releases and analyst notes show that, taken together, Canada’s Big Six banks have seen their share prices climb roughly 30%+ so far this year, outpacing the broader TSX, as investors bet that rate cuts, stabilising credit quality and stronger capital markets will support earnings into 2026. ^[8]

2. TSX Near Records as Markets Price a “Soft Landing”

Ahead of today’s open, a Canada‑focused market briefing notes that the S&P/TSX Composite Index closed Tuesday at about 31,049 points, a modest pullback after a strong run through late November. Even with that pause, a recent Reuters poll cited in the same report suggests strategists expect the index to rise nearly 5% to around 32,125 by the end of 2026, implying roughly 11% upside by mid‑2027 versus late‑November levels. TS2 Tech

Drivers behind this optimism include:

Lower interest rates in Canada and the U.S.
Strong demand for energy and metals, which make up roughly a third of the TSX. TS2 Tech
A powerful rebound in bank shares on the back of today’s and yesterday’s earnings. ^[9]

However, strategists also warn that valuations are now above long‑term averages, and many expect a near‑term correction if commodity prices wobble or earnings guidance disappoints. TS2 Tech

3. Growth Rebounds, but Domestic Demand is Still the Weak Spot

The latest Q3 2025 gross domestic product (GDP) figures from Statistics Canada, released last week, provide the essential backdrop for today’s market moves.

Key points from the national accounts:

Real GDP grew 0.6% in Q3, after a 0.5% decline in Q2. On an annualised basis, that’s about 2.6% growth, stronger than economists had expected. ^[10]
The rebound was driven primarily by trade, as imports fell 2.2% and exports edged higher, led by a 6.7% jump in crude oil and bitumen shipments. ^[11]
Government capital spending surged, including a sharp increase in investment in weapon systems and institutional construction projects like hospitals. ^[12]
By contrast, household consumption fell 0.1%, weighed down by a 2.3% drop in spending on passenger vehicles, and business capital investment was essentially flat. ^[13]

On a per‑person basis, GDP rose 0.5%, reversing the previous quarter’s decline, which helps explain why confidence in financial markets looks better than the mood in many households. ^[14]

Statistics Canada’s advance estimate points to a 0.3% decline in GDP in October, suggesting that the fourth quarter may start on a softer footing, especially if domestic demand doesn’t pick up. ^[15]

4. Inflation Is Cooling, but Not Enough for Deeper Rate Cuts

Today’s data are being read through the lens of the Bank of Canada’s October 29 Monetary Policy Report and the latest consumer price figures.

Statistics Canada reports that headline CPI inflation slowed to 2.2% year over year in October, down from 2.4% in September. The deceleration was driven largely by a sharper drop in gasoline prices, which fell 9.4% on a yearly basis. Excluding gasoline, inflation held at about 2.6%, as grocery prices and shelter costs remain elevated. ^[16]

The Bank of Canada’s October report describes an economy adjusting to U.S. tariffs and weaker export demand, with growth slowing and unemployment rising compared to 2024. Despite that, the Bank notes that underlying inflation has been hovering around 2½%, with preferred core measures stuck near 3%, reflecting elevated shelter costs and the pass‑through from trade‑related cost increases. ^[17]

Put bluntly: inflation is no longer the emergency it was, but it also hasn’t cooled enough for the Bank to slash rates aggressively.

5. Bank of Canada: Policy Rate at 2.25% and Likely on Hold

On October 29, the Bank of Canada cut its policy rate by 25 basis points to 2.25%, its second consecutive cut and the latest step in a 100‑basis‑point easing cycle earlier this year. ^[18]

Governor Tiff Macklem said the move was aimed at helping the economy adjust to trade shocks and slower global growth while keeping inflation close to the 2% target. He also signalled that rates are now near the “low end” of the neutral range, meaning further cuts would require a significant downside surprise in growth or inflation. ^[19]

A weekly preview from RBC Economics, published ahead of this Friday’s November jobs report, expects: ^[20]

Flat employment growth in November, after big gains in September and October.
The unemployment rate to hold at 6.9%, roughly one percentage point above RBC’s estimate of a “normal” level.
Continued softness in trade‑exposed sectors like manufacturing and transportation, even though they improved in October.

Because this jobs report lands just days before the December 10 rate decision, both markets and policymakers will be watching carefully for any surprise weakness.

6. Housing: Toronto Sales Hit a Five‑Month Low

If bank earnings and GDP paint a cautiously optimistic picture, housing tells a more fragile story – especially in Canada’s largest metro area.

New data from the Toronto Regional Real Estate Board (TRREB), reported by Reuters today, show that: ^[21]

Greater Toronto Area home sales fell to a five‑month low in November.
Seasonally adjusted sales slipped 0.6% from October to 5,620 units, the lowest level since June.
The board’s home price index declined 0.4% month over month to about C$971,100, and was down 5.8% from a year earlier.
Sales were 15.8% lower than November 2024, and new listings fell 4% year over year.

TRREB’s president Elechia Barry‑Sproule said many households would like to take advantage of lower borrowing costs and softer prices, but lack confidence in their long‑term employment outlook – a clear reminder that rate cuts alone don’t guarantee a housing rebound. ^[22]

Nationally, figures from the Canadian Real Estate Association (CREA) for October show a somewhat better – though still cautious – backdrop:

Home sales across Canada rose 0.9% month over month, marking six increases in seven months.
The MLS Home Price Index edged up 0.2% on the month but remained 3% lower than a year earlier.
The average sale price was down 1.1% year over year. ^[23]

CREA’s chief economist notes that with interest rates now “almost in stimulative territory,” markets should continue to firm into 2026, but that ongoing economic uncertainty will likely cap the pace of recovery. ^[24]

Taken together, the national and Toronto data suggest a buyer‑leaning market where improved affordability from lower rates is being offset by anxiety about jobs and income.

7. Dollar, Commodities and the Trade Shock Story

The Canadian dollar is modestly stronger today but still historically weak, trading around 1.398 per U.S. dollar in early Wednesday dealing, according to a North American market roundup. ^[25]

That report notes that:

Investors are waiting for domestic jobs data later this week before making bigger currency bets.
Markets expect the Bank of Canada to keep its policy rate unchanged at next week’s meeting, after the October cut to 2.25%. ^[26]
Oil prices, a critical driver of Canada’s terms of trade, are hovering in the high‑US$50s per barrel, while copper prices are near record levels around US$5.37 (per pound equivalent). ^[27]

These commodity dynamics reinforce a pattern highlighted both in the GDP data and the Bank of Canada’s MPR:

Export‑oriented sectors, particularly energy and metals, are benefiting from higher prices and volumes. ^[28]
At the same time, U.S. tariffs and trade uncertainty have weighed heavily on other exports and business investment, contributing to a GDP contraction in Q2 and persistently weak capital spending outside government. ^[29]

The result is a two‑track economy: resilient where global commodity demand is strong, but fragile in trade‑sensitive manufacturing and in household‑driven sectors like housing and consumer services.

8. What to Watch Next

For anyone following Canada economy news today, the headline is clear:

Banks are in strong shape, posting robust earnings and raising dividends.
Growth has stabilised after a mid‑year wobble, but is hardly booming.
Inflation is easing but still sticky under the surface.
Housing, especially in Toronto, is soft and heavily dependent on confidence in the labour market.

Over the next few days, three things will shape the narrative:

Q3 labour productivity and manufacturing import price data from Statistics Canada, scheduled for today, which will inform how much of Canada’s growth is coming from efficiency versus extra hours and how tariffs are feeding into costs. TS2 Tech
November’s jobs report on Friday, expected by RBC Economics to show flat employment and an unchanged 6.9% unemployment rate. ^[30]
The Bank of Canada’s December 10 decision, where most economists expect a pause at 2.25%, but where updated forecasts could change expectations for 2026. ^[31]

For households and businesses, the message is nuanced: debt servicing costs have fallen from their peak, and bank balance sheets look strong, but job security and income growth, not just interest rates, will determine how confident Canadians feel heading into 2026.