Based on coverage from Yahoo Finance, CBC, Castanet, Financial Post, and BNN Bloomberg.
Canada’s economy kept its head above water in February, with real GDP up 0.2 per cent, according to new Statistics Canada data. Early numbers for March suggest the economy then went basically nowhere, but even that’s enough to keep the country out of a technical recession after a weak end to 2025.
StatsCan’s preliminary read points to 0.4 per cent growth for the first quarter overall, which works out to about a 1.7 per cent annualized rate. The agency stresses those early estimates can change, with the official March and first-quarter figures due late May.
Statistics Canada GDP up 0.2% in February
The February gain was driven mainly by goods-producing industries, which rose 0.4 per cent. The star was manufacturing, up 1.8 per cent, its biggest monthly increase since January 2023.
StatsCan says the machinery subsector led the way, with transportation equipment manufacturing also contributing. Several auto assembly plants in Ontario ramped back up in February after shutdowns in January for retooling and maintenance, which helped lift the overall number.
Other sectors that added to growth included wholesale trade, transportation and warehousing, and finance and insurance. Resource extraction also contributed to February’s increase.
Ontario manufacturing rebound meets tariff headwinds
Even with February’s pop, manufacturing activity was still 3.1 per cent lower than a year earlier. StatsCan ties that to nearly a year of tariffs and trade threats from the United States, which have been a drag on the sector.
That’s the tension running through this report: Canada is getting monthly growth, but the base it’s growing from is softer than it was pre-tariff uncertainty. BMO Capital Markets managing director Benjamin Reitzes described the economy as “hanging in there,” adding that it’s essentially “treading water” while Canadians wait for more clarity on trade.
March GDP forecast shows momentum fading
StatsCan’s initial estimate for March is that real GDP was “essentially unchanged.” Under the hood, wholesale trade plus transportation and warehousing were expected to rise again, but those gains were offset by drops in retail trade and in mining, quarrying, and oil and gas extraction.
Statistics Canada officials also pointed to seasonal maintenance in the energy sector and an explosion at a key refinery in Texas in March, which likely slowed oil flows.
The bigger picture: four straight months of growth through February, then a flattening trend as the quarter wrapped up.
First-quarter growth beats Bank of Canada outlook
With February’s increase and March’s early flat reading, StatsCan’s preliminary numbers put first-quarter growth at an annualized 1.7 per cent. That would come in above the Bank of Canada’s most recent call for 1.5 per cent annualized growth in the quarter, published alongside its rate decision this week.
It’s also a clear shift from the fourth quarter of 2025, when the economy contracted at an annualized rate of 0.6 per cent. That earlier decline meant Canada’s real GDP growth for all of 2025 came in at 1.7 per cent, with StatsCan citing lower exports, especially to the U.S., as a main reason growth slowed.
What economists say Canadians should watch
Reitzes said Canada avoided a recession, defined as two consecutive quarters of negative growth, and he’s not expecting one. He also flagged two big sources of uncertainty: trade negotiations, including tariffs and the Canada-United States-Mexico Agreement (CUSMA) review, plus higher energy prices that could create “more regional divergence” across the country.
Desjardins deputy chief economist Randall Bartlett added a key caveat: these GDP numbers largely reflect the economy before the oil price shock tied to the conflict in Iran that began in early March.
The next real checkpoint is late May, when StatsCan publishes its updated March GDP and the official first-quarter results, potentially confirming whether Canada’s economy truly stabilized or just paused mid-step.
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