Canada: February’s GDP Advance Is the Calm Before the Oil Price Storm

The positive real GDP print in February was the fourth consecutive monthly advance in the top-tier economic indicator—good news by any measure, particularly after the volatile year that was 2025. The move higher was largely attributed to increased activity in goods-producing industries, which rose for a second consecutive month (0.4% m/m). The manufacturing sector led the growth (1.8%), the largest since January 2023. After three consecutive months of decline, motor vehicles and parts manufacturing grew sharply in February (9.8%)—as Ontario assembly plants ramped up production following shutdowns in January. Resource extraction also expanded in February (0.4%), due to higher activity in oil and gas extraction as well as mining and quarrying (excluding oil and gas).

Meanwhile, the services sector saw limited gains (0.1%). Wholesale trade saw a rebound (0.9%), partly offsetting losses in January, as automotive supply chain bottlenecks subsided. The transportation and warehousing sector saw a solid increase (1.2%). Truck transportation saw the largest monthly growth since March 2021 (2.3%) as industries reliant on freight movement and transborder movement of goods saw increased activity. The finance and insurance sector edged higher in the month (0.3%), thanks to greater expansion in banking, monetary authorities and other depository credit intermediation (0.4%).

The February print resulted in an increase to Canada’s real GDP per capita. That said, the trend has been dismal despite recent population declines, suggesting that it will take more than a change in immigration policy to restore real GDP per capita (graph 2).

Our tracking suggests real GDP growth of around 1.5% annualized in Q1 2026. This is broadly in line the Bank of Canada’s outlook published in the April 2026 Monetary Policy Report.

Although the February real GDP print is positive news, the road ahead remains volatile. The ongoing conflict in the Middle East External link. presents an upside risk to growth and inflation, while uncertainty around US trade policy External link. poses a key downside risk. With these opposing risks in mind, the Bank held rates steady in its latest announcement External link., emphasizing potential alternative paths for monetary policy given risks to the outlook. All in all, today’s GDP data is unlikely to shift the Bank’s policy direction in the near-term.