Statistics Canada says the economy shrank in the third quarter by 1.1% on an annualized basis.
The federal agency says a decrease in international exports and slower inventory accumulation by businesses were partially offset by increases in government spending and housing investment.
It also revised up its reading for real gross domestic product in the second quarter, noting the economy did not shrink, but rather grew by 1.4% on an annualized basis.
Today's report shows consumer spending continued to be flat for a second consecutive quarter.
Meanwhile, business capital investment fell by 2%.
Bank of Canada interest rate hikes have been putting downward pressure on consumer and business spending as they both face higher borrowing costs.