Goods-Producing Industries Lead the Decline
Canada’s real gross domestic product (GDP) declined by 0.2% in February 2025, offsetting part of the 0.4% increase recorded in January. The drop was concentrated in the goods-producing sector, which shrank by 0.6%. The largest contributor to this contraction was the mining, quarrying, and oil and gas extraction sector, which fell by 2.5%. Within this category, oil and gas extraction declined by 2.8%, with oil sands extraction down by 3.8%. This marked the most significant monthly decline in the sector since January 2024. The downturn was linked to adverse weather conditions and operational disruptions, including a tanker collision at a transshipment terminal off the coast of Newfoundland and Labrador.
Mining and quarrying activities, excluding oil and gas, also saw a 2.6% contraction, reversing growth from the previous two months. Coal mining declined sharply by 14.8%, largely due to reduced exports to Asian markets. Metal ore mining continued a multi-month downturn with a 2.5% reduction. Copper, nickel, lead, and zinc mining shrank by 4.5%, while other metal ores fell by 7.7%. Iron ore mining also dropped by 2.1%. On the other hand, non-metallic mineral mining and quarrying expanded by 2.7%, supported by a 3.5% increase in potash production.
Construction activity decreased by 0.5%, marking the first monthly decline since October 2024. Residential building construction was the largest drag, down 0.9%, led by reduced home renovation activity and a drop in single-family and row housing projects. Engineering construction and repair work also decreased, while non-residential construction continued to grow, rising by 0.6%, supported by sustained increases in industrial and public sector projects.
Service Sector Experiences Broad-Based Weakness
The service-producing sector slipped 0.1% in February. Transportation and warehousing services recorded notable declines, partially affected by weather-related disruptions. Rail transportation and postal services were particularly weak, while trucking services experienced a modest increase.
Real estate and rental and leasing services contracted by 0.4%, the sector’s largest drop since April 2022. Activity at real estate offices and among brokers decreased by 5.7%, coinciding with cooling housing markets in major cities. Rental and leasing services edged down slightly.
In contrast, the finance and insurance sector posted modest growth, benefiting from increased activity in financial investment services and banking. The public sector, including education and health care, recorded small gains but was insufficient to counterbalance losses in other service industries.
Preliminary Estimate for March and First Quarter Performance
Early estimates suggest a modest rebound in March, with GDP forecast to grow by 0.1%. This tentative recovery follows the February contraction and contributes to a projected annualized growth rate of 1.5% for the first quarter of 2025. These estimates are based on incomplete data and subject to revision.
Summary
The Canadian economy contracted in February 2025, driven by significant declines in goods-producing industries, particularly in mining, oil and gas extraction, and residential construction. Service industries also faced mild weakness, with real estate and transportation services showing declines. A partial rebound is expected in March, contributing to a modest first-quarter performance.
The data in this article is based on the Statistics Canada press release, available at https://www150.statcan.gc.ca/n1/daily-quotidien/250430/dq250430a-eng.htm.
