Canada's real gross domestic product expanded by 0.2% in February compared with January, according to data released by Statistics Canada. The outcome matched market expectations and extended a sequence of monthly increases to four, following a 0.1% rise in January.
Output gains were concentrated in goods-producing industries. Manufacturing activity climbed sharply in February, recording a 1.8% increase that Statistics Canada described as the sector's largest monthly gain since January 2023. The rise was broad-based across major manufacturing subsectors, including transportation equipment and automotive components, areas that had been under pressure in the past year.
Other contributors to the February improvement included a rebound in wholesale trade and stronger activity in transportation and warehousing. Mining along with oil and gas extraction also added to growth, reflecting a more favourable performance among resource sectors.
Despite these pockets of strength, several sectors moderated the overall advance. Agriculture, forestry, fishing and hunting contracted by 1.3% in February. Construction activity slowed, with a deceleration of 0.5% reported for the month. Aggregated public sector output - which combines educational services, health care and social assistance, and public administration - declined by 0.3% in February. Within that group, federal government public administration fell by 0.4%.
Statistics Canada provided an advance estimate indicating that monthly GDP would likely be unchanged in March. Using industry-level output to extrapolate quarterly figures, the agency estimated annualized first-quarter GDP growth of 1.7%.
This industrial-output-based annualized figure is slightly above the Bank of Canada's revised estimate for the first quarter, which puts annualized growth at 1.5%. Statistics Canada also noted that monthly GDP and quarterly GDP can diverge because monthly figures are calculated from industry-level output while quarterly GDP is measured using expenditure-based data.
The data arrived as Canada continues to navigate external pressures. The economy has so far avoided a recession even after the imposition of U.S. tariffs, but certain trade-exposed industries - notably steel, automotive and lumber - have experienced notable strain. Policymakers and economists have emphasized the importance of the review and continuation of the North American free trade agreement framework in protecting broad swaths of Canada's economy, noting that more than 85% of the economy has been shielded from U.S. tariffs under the arrangement.
In its recent commentary, the Bank of Canada identified the war in Iran as a material source of uncertainty for the outlook. While higher world oil prices can be a net positive for Canada's energy sector and national income, Statistics Canada and the central bank both highlighted that consumers and businesses remain strained by the broader economic environment.
The February monthly profile shows a mixed picture: pronounced strength in manufacturing and energy-related extraction lifted headline growth, while contractions in agriculture and parts of the public and construction sectors trimmed the advance. The agency's advance estimate for March and the industrial-output-based 1.7% annualized first-quarter projection suggest that the underlying momentum in industry helped drive overall growth in late winter.
Analysts and policymakers will be watching forthcoming monthly and expenditure-based quarterly data to reconcile industry-driven output measures with the broader GDP picture. For now, the Statistics Canada release underscores how specific sector dynamics - from transport equipment manufacturing to oil and gas extraction - are shaping near-term GDP readings.