Statistics Canada has reported that the Canadian economy expanded in February for the fourth consecutive month, although there were indications of a slowdown 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% growth rate, the fastest in over three years.
The growth was primarily driven by the machinery subsector and transportation equipment manufacturing. Several auto assembly plants in Ontario resumed operations in February after a period of shutdown for retooling and maintenance in the previous month. However, on an annual basis, manufacturing activity in February was down by 3.1%, 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 decline in the public sector and a slowdown in the arts, entertainment, and recreation industry had a dampening effect. Statistics Canada highlighted that spectator sports activity suffered in February due to the NHL pause for two weeks during the Winter Olympics in Italy.
The February economic performance aligned with early estimates and marked the fourth consecutive month of growth. Initial estimates for March suggest that real GDP remained stable, setting the first quarter on track for an annualized growth rate of 1.7%. While wholesale trade and transportation sectors saw gains in March, retail trade and mining, quarrying, and oil and gas extraction experienced declines. Seasonal maintenance in the energy sector and a refinery explosion in Texas were cited as factors that slowed oil production.
The Bank of Canada, in its recent monetary policy report, projected a 1.5% annualized growth rate 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.