Canada’s economy showed strong momentum in January, but initial indicators suggest growth came to a halt in February, according to national data.
Real gross domestic product (GDP) increased by 0.4% in January, driven largely by expansion in oil and gas, mining, and quarrying. This growth rate outpaced December’s 0.3% increase, which was slightly revised upward.
Goods-producing industries saw a significant boost, climbing 1.1%—the largest monthly jump in over three years. Meanwhile, the manufacturing, utilities, and construction sectors experienced gains, while the services industry posted a modest 0.1% rise.
However, GDP was partially held back by a slowdown in retail trade, which struggled in January after seeing robust expansion in December. Preliminary estimates for February indicate little to no growth.
Economic expert Andrew Grantham noted that severe winter conditions across the country and the mid-February conclusion of Ottawa’s temporary sales tax break likely contributed to the February stagnation.
He also pointed out that the January surge may have been influenced by Canadian businesses accelerating activity ahead of U.S. tariffs, which were repeatedly discussed before partially taking effect in March.
Grantham anticipates these tariffs will have a more pronounced negative effect on GDP in March and throughout the second quarter. The latest round of trade measures announced by the U.S. administration specifically targets vehicles manufactured outside the United States.