Statistics Canada reported that the Canadian economy expanded for the fourth consecutive month in February, although growth appeared to slow down 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 significant 1.8% growth, the fastest pace in over three years.
The machinery subsector drove the growth, supported by gains in transportation equipment manufacturing. Notably, several auto assembly plants in Ontario resumed operations in February after a period of shutdown for retooling and maintenance. On an annual basis, manufacturing activity in February was 3.1% lower, impacted by tariffs and trade uncertainties from the United States.
Apart from manufacturing, the wholesale trade and transportation and warehousing sectors contributed to the economic upturn in February. However, a decline in the public sector and a slowdown in the arts, entertainment, and recreation industry acted as drags on overall growth.
Statistics Canada highlighted that spectator sports activity was dampened in February due to the NHL pause for the Olympics Games in Italy. The agency’s preliminary estimates for March indicate that real GDP remained relatively stable during the month, potentially resulting in a 1.7% annualized growth rate for the first quarter.
While gains in wholesale trade and transportation sectors continued in March, declines were observed in retail trade as well as mining, quarrying, and oil and gas extraction. Notably, seasonal maintenance in the energy sector and an incident at a refinery in Texas likely impacted oil production in March.
The Bank of Canada, in its recent monetary policy report released alongside its decision to maintain the key interest rate at 2.25%, projected a 1.5% annualized growth rate for the first quarter. Statistics Canada will release updated GDP figures for March and the first quarter by the end of May.