Statistics Canada reported that the Canadian economy expanded for the fourth consecutive month in February, although there were indications of a slowdown as the first quarter drew to a close. Real gross domestic product (GDP) increased by 0.2% in February, with the manufacturing sector leading the growth with a 1.8% surge, the highest pace in over three years.
The growth in manufacturing was primarily driven by the machinery subsector, followed by gains in transportation equipment manufacturing. This growth was attributed to the reopening of several auto assembly plants in Ontario after a period of retooling and maintenance. Despite the positive trend in February, manufacturing activity was down by 3.1% on an annual basis due to trade uncertainties with the United States.
Other sectors contributing to the economic expansion in February included wholesale trade and transportation and warehousing, while a decline in the public sector and a slowdown in the arts, entertainment, and recreation industry acted as dampeners on overall growth. Sports activities were subdued in February as the NHL paused for two weeks during the Winter Olympics in Italy.
The month of February saw consistent economic growth, aligning with early estimates from Statistics Canada and marking the fourth consecutive month of expansion. However, the agency’s initial data for March indicated stagnant GDP, potentially resulting in a first-quarter growth rate of 1.7% when annualized.
March saw mixed performances in various sectors, with gains in wholesale trade and transportation and warehousing offset by declines in retail trade and mining, quarrying, and oil and gas extraction. Factors such as seasonal maintenance in the energy sector and disruptions like the refinery explosion in Texas likely impacted oil production.
The Bank of Canada’s recent monetary policy report projected a 1.5% annualized growth rate for the first quarter, in line with Statistics Canada’s estimates. Updated GDP figures for March and the overall first quarter performance are expected to be released by the end of May.