The Canadian economy is showing signs of slowing down in the first quarter of the year, with early estimates from Statistics Canada indicating that real GDP grew 0.6 per cent in the quarter, or 2.5 per cent on an annualized basis. February saw GDP growth slow to 0.2 per cent, below initial estimates of 0.4 per cent, while January’s growth was revised lower to 0.5 per cent from 0.6 per cent. The growth in February came primarily from services-producing sectors, while goods-producing industries saw minimal change. The warehousing and transportation sectors experienced gains, with air transportation seeing a 4.8 per cent increase in February, the largest monthly increase since May 2022.
The mining, quarrying, and oil and gas extraction industries expanded in February, while utilities and manufacturing sectors contracted. Statistics Canada’s early estimates for March suggest that economic growth was relatively stable in the month, although these figures may be revised. Official first-quarter estimates will be available at the end of May. The transportation sectors, particularly air transportation, saw growth in February due to increased flight capacity to Asia ahead of the Lunar New Year. The growth in the mining and oil and gas extraction sectors was also notable, with expansion in these industries for the fourth time in five months. However, the overall pace of growth in the Canadian economy seems to be slowing down.
The agency notes that the growth in February was primarily driven by services-producing sectors, indicating a shift in the composition of economic growth. Some sectors, such as warehousing, transportation, and air transportation, experienced significant gains, while others, like utilities and manufacturing, saw contractions. The cold snap in Western Canada in January may have had a temporary impact on sectors like rail travel, leading to a rebound in February. Despite the mixed performance across various industries, the overall economic growth in Canada appears to be moderating, with early estimates suggesting no significant change in March.
The first quarter economic performance in Canada is expected to be slower than initially anticipated, based on the early estimates from Statistics Canada. The agency cautions that these figures are subject to revision, and official first-quarter estimates will be released at the end of May. The slower pace of growth in the Canadian economy may have been influenced by a combination of factors, including global economic uncertainties, domestic challenges, and sector-specific issues. As the economy continues to evolve, it will be important to closely monitor key indicators to assess the overall health and direction of the Canadian economy in the coming months.
