Statistics Canada reported that the Canadian economy expanded for the fourth consecutive month in February, although there were indications that the growth rate was slowing towards the end of the first quarter. Real gross domestic product (GDP) increased by 0.2% in February, with the manufacturing sector leading the way with a 1.8% surge, marking its fastest growth in over three years.
The machinery subsector drove the growth, followed by improvements in transportation equipment manufacturing. Several auto assembly plants in Ontario resumed operations in February after a temporary shutdown for retooling and maintenance in the previous month. However, on a yearly basis, manufacturing activity in February was down by 3.1% due to ongoing tariffs and trade uncertainties with the United States.
Wholesale trade and transportation and warehousing sectors also contributed to the economic upturn in February, while a decline in the public sector and a slowdown in arts, entertainment, and recreation industries hampered overall growth. Notably, spectator sports activities were subdued in February as the NHL took a two-week break for the Olympics Games in Italy.
These February gains aligned with Statistics Canada’s preliminary estimates, marking the fourth consecutive month of economic expansion. Despite a significant economic downturn in October, the overall economic performance in the final quarter of 2025 was slightly negative.
Initial estimates for March suggest that real GDP remained stable, setting the stage for an annualized growth rate of 1.7% for the first quarter. While wholesale trade and transportation sectors showed further improvement in March, declines in retail trade and mining, quarrying, and oil and gas extraction sectors offset some of the gains. Factors such as seasonal maintenance in the energy sector and an explosion at a refinery in Texas slowed down oil production during the month.
The Bank of Canada’s monetary policy report, released in conjunction with its recent rate decision, forecasted a 1.5% annualized growth rate for the first quarter. Updated GDP figures for March and the first quarter are expected to be released by Statistics Canada at the end of May.