Real gross domestic product (GDP) in Canada was down 0.2% in February, partly offsetting January’s 0.4% increase, reported Statistics Canada on Wednesday.
“After driving growth in January, goods-producing industries (-0.6%) drove the decline in February, as mining, quarrying, and oil and gas extraction and construction contributed the most to the aggregate’s decline,” said the federal agency.
“Services-producing industries edged down 0.1% in February as contractions in transportation and warehousing and real estate and rental and leasing were partially offset by a rise in finance and insurance. Overall, 12 of 20 industrial sectors declined in February.
“Following two consecutive monthly increases, the mining, quarrying, and oil and gas extraction sector became the largest detractor from growth, down 2.5% in February, as most subsectors contracted.”
Photo by James Wheeler
“The manufacturing sector rose 0.6% in February, up for the second month in a row, in large part driven by durable-goods manufacturing industries in February,” explained the report.
“Advance information indicates that real GDP increased 0.1% in March. Increases in mining, quarrying, and oil and gas extraction, retail trade and transportation and warehousing were partially offset by decreases in manufacturing and wholesale trade. Owing to its preliminary nature, this estimate will be updated on May 30, 2025, with the release of the official GDP by industry data for March,” said Statistics Canada.
“With this advance estimate for March, information on real GDP by industry suggests that the economy expanded 0.4% in the first quarter of 2025. The official estimate for the first quarter will be available on May 30, 2025, when the official estimate of real GDP by income and expenditure is released.”
Andrew Grantham
“The 0.2% drop in GDP was weaker than the consensus forecast for a flat reading, although followed a strong 0.4% advance in the prior month. The contraction was driven by mining, oil & gas, transportation and real estate, with Statistics Canada citing weather conditions as at least a contributing factor in those declines. Manufacturing and wholesaling, which are likely to be adversely impacted by tariffs ahead, both grew in February. The advance reading for March pointed to a marginal increase of 0.1%, although that may be largely driven by a rebound in mining, oil & gas. Sector data has already pointed to declines in manufacturing and wholesaling during the final month of the quarter, suggesting underlying momentum is fading,” he said.
“For Q1 as a whole, today’s advance data suggests growth of 1.5% annualized, which is only slightly below the Bank of Canada’s MPR projection of 1.8%. However, the reading for Q1 as a whole was driven in part by tariff front-running activity early in the year, and momentum clearly faded later in the quarter. We continue to expect a decline in GDP during Q2, and a 25bp interest rate cut at the June meeting.”
Marc Ercolao
Marc Ercolao, Economist, TD Economics, said the economic momentum that carried into the early stages of 2025 is starting to wane.
“With the information we have at hand, Q1-2025 growth is tracking around 1.5%, a few ticks below the Bank of Canada’s April MPR projections. Past this, the outlook is turbulent, with clear downside risks to Canada’s economy as the direct impact from tariffs add to the headwinds from plunging sentiment,” he said.
“Policymakers at the BoC have their work cut out for them. The Bank opted to hold the policy rate steady at 2.75% last meeting, despite appearing reasonably downbeat about economic growth prospects highlighted in their scenario analysis. With Canada’s housing market visibly strained, and some rollover in labour markets and consumer spending, we’d expect the BoC to cut its policy rate by 25 bps at their next meeting in June.”
Douglas Porter
Douglas Porter, Chief Economist, BMO Capital Markets, said the latest monthly GDP readings are a bit of a wash, with February’s result even softer than expected—and the weakest monthly reading in more than two years—but March a bit better than expected.
“The rebound in March reinforces the point that much of February’s drop was weather-related, and not really a sign that the economy was buckling due to trade uncertainty. Adding it up, the overall Q1 growth rate was a snick below the BoC’s estimate, but in line with our call, so no major drama here. The real drama now begins, with the tariffs much more of an issue in Q2, and the U.S. economy also now facing much heavier weather of its own. We would be surprised if GDP manages to grow in Q2,” he said.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024 and 2025.
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