Statistics Canada reported that the Canadian economy expanded for the fourth consecutive month in February, although there were indications of a slowdown towards the end of the first quarter. Real gross domestic product increased by 0.2% in February, driven by a robust 1.8% growth in the manufacturing sector, which marked its strongest performance in over three years. Within manufacturing, the machinery subsector led the growth, followed by improvements in transportation equipment manufacturing. Notably, several auto assembly plants in Ontario resumed operations in February after a temporary shutdown for upgrades and maintenance.
Year-over-year, manufacturing activity in February was down by 3.1%, impacted by ongoing tariffs and trade uncertainties with the United States. Additionally, the wholesale trade and transportation sectors contributed positively to economic growth in February, while a decline in the public sector and a slowdown in the arts, entertainment, and recreation industry exerted downward pressure.
Statistics Canada highlighted that spectator sports activity was subdued in February due to a temporary pause in NHL games as athletes participated in the Olympics in Italy. The February economic performance aligned with early estimates and marked the fourth consecutive month of growth. After a significant economic contraction in October, the final quarter of 2025 ended with a slight overall decline.
Preliminary estimates for March indicated minimal change in real GDP, potentially resulting in a first-quarter annualized growth rate of 1.7%. March saw gains in wholesale trade and transportation sectors offset by declines in retail trade, mining, quarrying, and oil and gas extraction. Factors such as seasonal maintenance in the energy sector and a refinery explosion in Texas likely impacted oil production.
In its recent monetary policy report, the Bank of Canada projected a 1.5% annualized growth rate for the first quarter. Updated GDP figures for March and the first quarter from Statistics Canada are expected to be released at the end of May.
