Canada’s GDP contracts by 0.2% in February 2025 due to industry declines

Investing.com -- Canada’s real gross domestic product (GDP) contracted by 0.2% in February 2025, according to a report from Statistics Canada. This decline follows a 0.4% increase in January 2025, with goods-producing industries driving the downturn.

In particular, sectors such as mining, quarrying, oil and gas extraction, and construction contributed significantly to February’s overall GDP decrease. The mining, quarrying, and oil and gas extraction sector, which had seen two consecutive monthly increases, contracted by 2.5% in February. This was largely due to a 2.8% contraction in oil and gas extraction, which completely offset January’s 2.6% expansion.

The construction sector also saw a decline in February, contracting by 0.5%. This was the first contraction in four months, with residential building construction and engineering and other construction activities contributing the most to the decline.

The real estate and rental and leasing sector contracted by 0.4% in February, marking its largest decline since April 2022. Activity at the offices of real estate agents and brokers and activities related to real estate fell by 10.4%, contributing the most to the decline in the real estate sector.

Despite these declines, the manufacturing sector rose by 0.6% in February, largely driven by durable-goods manufacturing industries. Machinery manufacturing contributed the most to the increase in the durable goods manufacturing aggregate, posting its highest increase since February 2023.

Transportation and warehousing contracted by 1.1% in February, impacted by major snowstorms that hit Central and Eastern Canada and storms in British Columbia.

The finance and insurance sector increased by 0.7% in February, marking its third consecutive monthly rise. This was largely driven by financial investment services, funds, and other financial vehicles, which saw a 2.7% rise in February.

Preliminary data indicates that real GDP increased by 0.1% in March 2025. The official estimate for the first quarter of 2025 suggests that the economy expanded by 0.4%. The official estimate will be available on May 30, 2025, when the official estimate of real GDP by income and expenditure is released.

In response, CIBC (TSX:CM)’s Andrew Grantham called February’s fall unexpected and said, "We continue to expect a decline in GDP during Q2, and a 25bp interest rate cut at the June meeting."