Canada’s economy managed slight growth after it shrunk in the last quarter of 2025, with February seeing a 0.2 per cent increase in GDP and a modest increase of 0.1 per cent in January, Statistics Canada said.
Based on current estimates, Statistics Canada is projecting that Canada’s annualized GDP growth for the first quarter of 2026 will be 1.7 per cent.
The Bank of Canada projects the economy will expand 1.2 per cent in 2026, 1.6 per cent in 2027, and 1.7 per cent in 2028, “as growth in exports and business investment gradually resumes.”
The official final estimate for quarterly GDP growth will be released next month.
Canada’s tariff-hit manufacturing sector led the growth in February, rising by 1.8 per cent. This was the largest growth for the sector since January 2023 and was driven by a 3.6 per cent increase in durable-goods manufacturing.
Within that sector, machine manufacturing came in strong with an increase of 8.7 per cent. The manufacturing of transportation equipment, which fell by seven per cent last month, nearly recovered with a 5.5 per cent increase.
Canada’s auto sector, which has been in the crosshairs of U.S. President Donald Trump’s tariffs, saw motor vehicle manufacturing rise by 20.4 per cent, while auto parts manufacturing rose by 4.2 per cent.
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Auto assembly plants in Ontario – the heart of Canada’s car manufacturing industry – ramped up production in February, Statistics Canada said.
The transportation and warehousing sector rose 1.2 per cent in February, with truck transportation recording its largest growth since March 2021, data showed.
Primary metal manufacturing, another sector hit by Trump’s tariffs, rose by 5.2 per cent.
Mining, quarrying, and oil and gas extraction grew 0.4 per cent in February, the agency added, while the finance and insurance sector grew by 0.2 per cent.
Canada’s public sector, however, saw a 0.3 per cent decline in February with public administration recording a 0.5 per cent decline.
Education services shrunk by 0.5 per cent, down for the first time in four months.
Canada’s arts, entertainment and recreation sector contracted 2.5 per cent in February. This was the first decline in three months in the sector and the largest since January 2022, when the Omicron variant of COVID-19 forced shutdowns across the country.
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