Statistics Canada reported that the economy expanded for the fourth consecutive month in February, although there were indications of a slowing momentum by 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 in February was primarily led by the machinery subsector, with notable gains in transportation equipment manufacturing. Several auto assembly plants in Ontario resumed operations in February following a period of shutdown for retooling and maintenance in the previous month.
Despite the positive trajectory in February, on an annual basis, manufacturing activity was down by 3.1% in February, impacted by tariffs and trade tensions with the United States. Wholesale trade and transportation and warehousing sectors also contributed to the economic growth in February, while a contraction in the public sector and a slowdown in the arts, entertainment, and recreation industry dampened overall growth.
Statistics Canada highlighted that spectator sports activity saw a decline in February due to the NHL pausing for two weeks during the Olympics Games in Italy. The consistent economic growth in February aligned with the agency’s early projections for the month, marking the fourth consecutive month of expansion. However, a significant economic decline in October had previously led to a slight negative growth in the final quarter of 2025.
Preliminary estimates for March indicate that the real GDP remained relatively stable, potentially setting the first quarter up for an annualized growth rate of 1.7%. While there were advancements in wholesale trade and transportation and warehousing sectors in March, declines in retail trade, mining, quarrying, and oil and gas extraction offset some of the gains. Seasonal maintenance in the energy sector and an incident at a key refinery in Texas were cited as factors that may have impeded oil flows from the industry during that month.
The Bank of Canada’s monetary policy report, released alongside its rate decision, forecasted a 1.5% annualized growth rate for the first quarter. Updated figures for March GDP and the first quarter as a whole will be disclosed by Statistics Canada at the end of May.
