By Promit Mukherjee
OTTAWA, April 30 (Reuters) – Canada’s economy grew by 0.2% in February from January, matching analysts’ expectations, as good-producing industries drove gains for the second month in a row, data showed on Thursday.
This was the fourth consecutive positive GDP growth and follows a modest 0.1% increase in January.
The acceleration in February was driven by a sharp rise in manufacturing activity, rebound in wholesale trade, transportation and warehousing and growth in mining and oil and gas extraction among others, Statistics Canada said.
Canada’s economy has managed to avoid a recession despite U.S. tariffs but its economy has teetered as some crucial sectors such as steel, automotive and lumber have suffered.
Economists and policymakers call the successful review and continuation of the North American free trade deal critical for Canada as it has shielded over 85% of the economy from U.S. tariffs.
The Bank of Canada said on Wednesday the war in Iran was also a source of major uncertainty. While Canada benefits from higher oil prices, consumers and businesses continue to be strained.
According to an advance estimate by StatsCan, the monthly GDP would likely remain unchanged in March and the annualized first quarter GDP growth based on industrial output to be 1.7%, the statistics agency said.
This will be slightly higher than the revised estimate of the BoC which expects the first quarter annualized growth at 1.5%.
Monthly GDP figures are calculated based on industry-level output, while quarterly GDP is measured using expenditure-based data, which can lead to differences in growth rates.
“Headwinds from the energy price shock, U.S. tariffs, trade policy uncertainty and a shrinking population will likely keep recession risks elevated,” said Michael Davenport, senior economist at Oxford Economics.
But the fiscal support that has been extended could boost the economy in the second quarter, he said.
The February GDP was led by a 1.8% growth in the manufacturing sector, which posted its largest monthly growth since January 2023.
Manufacturing, which showed a robust growth across all major subsectors such as transportation equipment and automotive, is one of the most exposed sectors to U.S. tariffs and had been largely on a downturn since last year.
Agriculture, construction and public sector operations offset some of the solid growth that came from other sectors.
Agriculture, forestry, fishing and hunting saw activity contracting by 1.3% while construction reported a deceleration of 0.5%.
The public sector aggregate comprising educational services, health care and social assistance, and public administration was down 0.3% in February, with federal government public administration contracting 0.4%, StatsCan said.
The Canadian dollar was trading up 0.11% to C$1.3669 against the U.S. dollar, or 73.16 U.S. cents.
(Reporting by Promit Mukherjee; Editing by Dale Smith and Nick Zieminski)
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