Statistics Canada reported that the Canadian economy expanded for the fourth consecutive month in February, although growth momentum showed signs of weakening 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, marking its fastest growth rate in over three years.
The growth was primarily led by the machinery subsector, followed by gains in transportation equipment manufacturing. Notably, several auto assembly plants in Ontario resumed operations in February after a temporary shutdown for retooling and maintenance in the previous month.
Despite the monthly growth, manufacturing activity was down by 3.1% on an annual basis in February, influenced by trade tensions and tariffs imposed by the United States over the past year. Wholesale trade and transportation and warehousing sectors also contributed to the economic upswing in February, while a decline in the public sector and a slowdown in the arts, entertainment, and recreation industry hindered overall growth.
Statistics Canada highlighted that spectator sports activity was subdued in February due to a two-week pause in the NHL schedule for the Olympics Games in Italy. The February performance aligned with early estimates and marked the fourth consecutive month of economic expansion, following a significant contraction in October that slightly impacted the final quarter of 2025.
Preliminary estimates for March indicated stable real GDP, potentially resulting in a 1.7% annualized growth rate for the first quarter. While there were advancements in wholesale trade and transportation and warehousing sectors in March, declines in retail trade and mining, quarrying, and oil and gas extraction offset some of the gains. The energy sector faced seasonal maintenance, and an incident at a major refinery in Texas disrupted oil flows during that period.
The Bank of Canada’s monetary policy report projected a 1.5% annualized growth rate for the first quarter, coinciding with the decision to maintain the key interest rate at 2.25%. Updated GDP figures for March and the first quarter will be released by Statistics Canada at the end of May.
