Statistics Canada reported that the Canadian economy expanded for the fourth consecutive month in February, although there were indications of a slowdown as the first quarter progressed. Real gross domestic product (GDP) increased by 0.2% in February, with the manufacturing sector leading the growth at a rate of 1.8%, its fastest in over three years.
The rise in manufacturing was primarily driven by growth in the machinery subsector and transportation equipment manufacturing. Notably, several auto assembly plants in Ontario resumed operations in February after a period of shutdown for retooling and maintenance in the previous month.
Compared to the previous year, manufacturing activity in February was down by 3.1%, influenced by a series of tariffs and trade uncertainties with the United States. Additionally, the wholesale trade and transportation and warehousing sectors contributed positively to the economic upturn in February, while a decline in the public sector and a slowdown in arts, entertainment, and recreation activities had a dampening effect on overall growth.
Statistics Canada highlighted that spectator sports were affected in February due to the NHL pausing for two weeks during the Winter Olympics in Italy. The February performance aligned with early estimates and marked the fourth consecutive month of economic expansion following a contraction in October that slightly impacted the final quarter of 2025.
Preliminary estimates for March suggested stable GDP growth, potentially setting the first quarter on track for an annualized growth rate of 1.7%. While the wholesale trade and transportation sectors showed improvement in March, declines in retail trade and mining, quarrying, and oil and gas extraction tempered overall economic performance. Factors such as seasonal maintenance in the energy sector and a refinery explosion in Texas contributed to the slowdown in oil production.
The Bank of Canada’s recent monetary policy report forecasted a 1.5% annualized growth for the first quarter. Updated GDP figures for March and the first quarter are scheduled for release by Statistics Canada at the end of May.