Canada’s gross domestic product shrank in February and remained stagnant in March. The contraction was primarily driven by a drop in energy production.
According to the latest data from Statistics Canada published Wednesday, GDP fell by 0.2 per cent in February and stalled in March after growing by 0.4 per cent in January.
“The mining, quarrying, and oil and gas extraction sector became the largest detractor from growth, down 2.5% in February, as most subsectors contracted,” said the agency.
“Oil and gas extraction contracted 2.8% in February, fully offsetting January’s 2.6% expansion. February’s decline was a result of broad-based declines across subsectors.”
February saw a 3.8 per cent drop in oil sands extraction, marking the industry’s largest contraction since January 2024.
Construction was also down in February for the first time in four months, falling by 0.5%.
“Residential building construction (-0.9%) contributed the most to the decline in February, recording its largest decrease since April 2024 and reflecting lower home alterations and improvements activity coupled with lower construction of single-family and row houses,” said Statistics Canada.
“Engineering and other construction activities (-0.6%) and repair construction (-0.8%) also contributed to the decline in the sector, while non-residential building construction (+0.6%) expanded for the seventh consecutive month as both public and industrial building construction rose in February.”
The U.S. economy also shrank by 0.3 per cent of its annual pace between January and March, due to its ongoing trade war with international partners.
“These figures are driven by a mix of instability caused by Trump’s trade war and the lingering uncertainty it created,” Emmanuelle B. Faubert, economist at the Montreal Economic Institute told True North. “Consumer confidence is low because people understand the benefits of global free trade, and the perils of turning your back to it.”
According to the agency, 12 of the country’s 20 industrial sectors saw declines in February.
“If Prime Minister Carney wants to reverse this trend, he needs to tackle some of the things that have made Canada so vulnerable to these threats, including removing barriers to trade both domestic and foreign, and lowering our tax burden so that consumers can keep more of their hard earned dollars,” said Faubert.
Transportation and warehousing also contracted in February by 1.1 percent in part due to two major snowstorms that hit Central and Eastern Canada, as well as several storms in British Columbia, which negatively impacted the sector.
“Transit, ground passenger, scenic and sightseeing transportation fell 3.4% in February, with urban transit usage falling as poor road conditions in some of Canada’s largest urban centres limited activity for some days in the month,” it said.
“Rail transportation (-5.6%) declined for the first time in three months in February, as commuter train cancellations, and capacity and speed reductions by rail carriers due to severe winter conditions all contributed to the decrease.”
February’s contraction saw the largest decline in the transportation sector since August 2024, when work stoppages at Canada’s two main rail carriers interrupted operations.
However, manufacturing saw a boost of 0.6 per cent that month, which helped to offset some of the overall decrease.