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, mainly driven by a 1.8% surge in the manufacturing sector, marking its quickest growth rate in over three years.
The growth was primarily led by the machinery subsector, with transportation equipment manufacturing also contributing to the gains. Several auto assembly plants in Ontario resumed operations in February after a temporary shutdown for retooling and maintenance the previous month.
Despite the positive momentum, manufacturing activity in February was down 3.1% compared to the previous year due to trade tensions and tariffs imposed by the United States. The wholesale trade and transportation sectors were other key contributors to the economic expansion in February, while a decline in the public sector and slowdown in arts, entertainment, and recreation industries dampened overall growth.
Statistics Canada highlighted that spectator sports activity was impacted in February as the NHL paused for two weeks during the Winter Olympics in Italy. The agency’s initial estimates for March suggest that real GDP remained relatively unchanged for the month, potentially resulting in a 1.7% annualized growth rate for the first quarter.
Further gains in wholesale trade and transportation sectors in March were offset by declines in retail trade, mining, quarrying, and oil and gas extraction. Seasonal maintenance in the energy sector and an explosion at a major refinery in Texas likely contributed to the slowdown in oil flows from the industry.
The Bank of Canada’s recent monetary policy report projected a 1.5% annualized growth for the first quarter. Updated figures for March GDP and the overall first quarter performance will be released by Statistics Canada at the end of May.
