Canadian GDP ticked higher by 0.2% month-on-month (m/m) in February, in line Statistics Canada’s advanced guidance and market expectations.
Growth was not particularly broad based. Only 8 of 20 industries registered an increase on the month. Goods industries rose for a third consecutive month (+0.4% m/m), while the services sector ticked higher by 0.1% m/m.
The manufacturing sector (1.8% m/m) contributed most to goods-side growth with strong gains in both machinery and transportation subsectors. The mining/oil/gas sector (+0.4% m/m) also pitched into the headline gain. Meanwhile, the construction sector slipped after three consecutive monthly gains.
On the services side increases in the finance and insurance sector (+0.3% m/m), wholesale trade (0.9% m/m), and transportation and warehousing (1.2% m/m) were slightly offset by declines in the public sector aggregate (-0.3% m/m).
Advanced guidance calls for no growth in March, with further gains in wholesale and transportation sectors being offset by a pullback in retail trade and the mining, oil and gas sector.
Key Implications
Canada’s economy looks to be off to a solid start in 2026 after GDP contracted in Q4-2025. With February’s print and a flash estimate for March, Q1-2026 growth is tracking around 1.7%, broadly consistent with the Bank of Canada’s recently updated economic projections and our own forecast.
How growth evolves beyond Q1 will matter more for the policy outlook than the near term momentum itself, as the Canadian economy faces significant cross currents – most notably elevated trade uncertainty and, more recently, spillovers from the ongoing Middle East conflict. The BoC has emphasized that these forces leave two sided risks to the outlook, and policy remains data dependent, with the Governing Council prepared to respond if growth or inflation deviates materially from expectations. That said, our base case remains that the Bank holds the policy rate steady for the remainder of the year.
