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Canada’s economy recorded a 0.2% monthly growth in February, marking the fourth consecutive increase and aligning with market expectations. The growth was largely driven by strong performance in manufacturing, wholesale trade, and the mining and oil and gas sectors. Despite global uncertainties, including U.S. tariffs and geopolitical tensions, the economy has remained stable. However, sectors such as agriculture, construction, and public administration saw a decline. Early estimates suggest flat growth in March, with first-quarter GDP projected to expand at an annualised rate of 1.7%, slightly above central bank estimates.
Canada’s economy expanded by 0.2% in February compared to the previous month, maintaining a steady growth trend and meeting analysts’ expectations, according to data released by Statistics Canada in the past week. Advertisement
This marks the fourth consecutive month of economic expansion, following a marginal 0.1% rise recorded in January. The continued growth reflects resilience in key industrial sectors, even as external pressures remain.
The February growth was largely supported by the goods-producing industries for the second straight month. A notable increase in manufacturing activity, along with improvements in wholesale trade, transportation, warehousing, and mining as well as oil and gas extraction, contributed significantly to the overall performance.
Manufacturing emerged as the key driver, recording a strong 1.8% monthly growth, its highest level since early 2023. The sector showed broad-based gains across major segments, including transportation equipment and automotive. This is significant as manufacturing has been under pressure since last year due to its exposure to U.S. tariffs.
Canada’s economy has managed to avoid slipping into a recession despite ongoing trade tensions with the United States. However, certain sectors such as steel, automotive, and lumber have been impacted, leading to uneven growth across industries.
Policymakers and economists have highlighted the importance of the continued implementation of the North American free trade agreement, noting that it has helped protect more than 85% of Canada’s economy from the impact of U.S. tariffs.
At the same time, global uncertainties continue to influence the economic outlook. The Bank of Canada recently indicated that geopolitical tensions, particularly the conflict involving Iran, remain a major source of risk. While higher oil prices may benefit Canada as an energy exporter, they have added pressure on consumers and businesses.
Preliminary estimates suggest that economic activity likely remained unchanged in March. Based on industrial output data, first-quarter GDP growth is expected to come in at an annualised rate of 1.7%. This is slightly higher than the central bank’s revised estimate of 1.5%.
It is important to note that monthly GDP figures are calculated based on industry output, whereas quarterly GDP is measured using expenditure data, which can sometimes lead to differences in reported growth rates.
An economist from Oxford Economics stated that multiple factors, including energy price shocks, U.S. tariffs, trade policy uncertainty, and a declining population, are expected to keep recession risks elevated. However, the economist also noted that ongoing fiscal support measures could provide some relief and support economic growth in the coming quarter.
Despite the overall positive momentum, some sectors recorded a decline. Agriculture, forestry, fishing, and hunting activity contracted by 1.3%, while the construction sector saw a 0.5% decline, indicating some slowdown in development-related activity.
The public sector also registered a slight contraction of 0.3%, with federal public administration declining by 0.4%. This includes areas such as education, healthcare, and social assistance services.
In currency markets, the Canadian dollar showed a slight appreciation, trading at CAD 1.3669 against the U.S. dollar, or approximately USD 0.7316.
Source Reuters
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