Statistics Canada reported that the Canadian economy expanded for the fourth consecutive month in February, although growth appeared to slow towards the end of the first quarter. Real gross domestic product (GDP) increased by 0.2% in February, driven by a robust 1.8% growth in the manufacturing sector, which marked its strongest growth rate in over three years.
Within the manufacturing sector, the machinery subsector led the growth, supported by increases in transportation equipment manufacturing. Notably, several auto assembly plants in Ontario resumed operations in February after a temporary shutdown for retooling and maintenance the previous month. However, compared to the previous year, manufacturing activity in February was down by 3.1% due to ongoing tariffs and trade uncertainties with the United States.
Other sectors contributing to the economic growth in February included wholesale trade and transportation and warehousing, while a decline in the public sector and a slowdown in the arts, entertainment, and recreation industry had a dampening effect.
Statistics Canada highlighted that spectator sports activities were subdued in February due to a two-week pause in the NHL season during the Winter Olympics in Italy. Despite these factors, the February GDP results were in line with initial estimates, marking the fourth consecutive month of growth following a contraction in October.
Preliminary estimates for March indicated that real GDP remained relatively stable, setting the stage for a projected annualized growth rate of 1.7% for the first quarter. While wholesale trade and transportation and warehousing sectors continued to show strength in March, declines in retail trade and mining, quarrying, and oil and gas extraction offset some of the gains. Factors such as seasonal maintenance in the energy sector and a refinery explosion in Texas likely impacted oil production during the month.
The Bank of Canada’s monetary policy report, released alongside its recent rate decision, forecasted 1.5% annualized growth for the first quarter. Updated GDP figures for March and the first quarter as a whole are expected to be released by Statistics Canada at the end of May.
