- Canadas real GDP rose 0.1% in March 2025 after a 0.2% drop in February, led by modest goods-sector gains.
- Resource extraction jumped (mining, quarrying, and oil & gas +2.2%) and construction rose 0.5%, while manufacturing fell 0.4% and utilities sank 4.1%.
- Services improved with retail trade up 0.8% and gains in transport and accommodation, signalling firmer domestic demand.
- Momentum faded in April as GDP slipped 0.1% with goods down 0.6% on manufacturing weakness, while services edged up 0.1%.
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The Canadian economy in early 2025 is showing signs of both stabilization and emerging stress—March saw a modest recovery from February’s contraction, followed by a slight pullback in April. The gains in March were uneven, heavily concentrated in resource extraction (mining, oil & gas) and construction, while manufacturing and utilities weakened significantly. The rebound in services—retail, transport, accommodation—suggests domestic demand regained some traction. However, manufacturing’s volatility and the reversal in April warn of underlying fragilities.
Mining, quarrying, and oil & gas extraction were the strongest performers in March. The sector rose 2.2%, with oil & gas extraction up about 2.0%, led by resumed offshore oil production in Newfoundland & Labrador and higher oil sands & synthetic crude output in Alberta. Coal mining posted its highest monthly jump since early 2023 (≈ +16.8%). Meanwhile, support activities for extraction rose by 3.6%. These gains suggest responsiveness to both export demand and supply-side shocks.
Construction also rebounded (+0.5%) in March, led by residential (+1.3%) and non-residential building (+1.5%), but utilities fell sharply due to lower electricity demand tied to milder weather, illustrating sensitivity to exogenous (weather) and policy/environmental variables. Manufacturing’s 0.4% drop was broad, with large declines in chemical manufacturing (−6.1%) and machinery (−3.8%), despite gains in transportation equipment (+3.1%). Thus, gains in goods-producing sectors were uneven.
Services-producing industries showed a pickup in sectors linked to consumption and mobility—retail trade recovered strongly (+0.8%), motor vehicles & dealers led among retail sub-sectors. Accommodation, food services, transportation & warehousing also contributed positively. The flip side in April: downstream trade in wholesale, parts of retail, and manufacturing saw declines, likely reflecting international headwinds (e.g., U.S. tariffs) and softer demand.
The April 2025 contraction of 0.1% in GDP, notably with goods-sector down 0.6% and services up only 0.1%, illustrates that the March rebound did not sustain. Manufacturing’s decline in April was the deepest since April 2021. While finance, insurance, and public administration provided some stability, trade-exposed sectors are showing vulnerabilities. Flash estimates for May point to another slight decline (−0.1%), raising concerns about weak momentum for Q2 overall.
Strategic implications:
- Resource extraction and construction remain key pillars for growth; exposure to energy prices and regulation in these sectors will matter greatly.
- Manufacturing, particularly parts tied to U.S. trade policy (motor vehicles, chemicals), poses risk; trade relations will likely loom large for investment decisions.
- Weather and exogenous shocks (e.g., electricity demand) continue to produce volatility—policy planners should build in buffers.
- Fiscal and monetary policy face balancing acts: support domestic demand without overstimulating inflation, in an environment of weak export and investment outlooks.
Open questions:
- Can the gains in resource extraction and construction offset continuing declines in manufacturing if trade barriers persist?
- Will services sectors maintain growth amid softening global demand and potential consumer retrenchment?
- Is the April-May downward trend sufficient to push Q2 2025 into contraction, and how will that influence Bank of Canada policy?
- How sensitive will Canadian provinces be to volatile utilities (weather, energy supply) and resource-sector shocks?
Supporting Notes
- Real GDP rose 0.1% in March 2025, reversing 0.2% decline in February.
- Goods-producing industries up 0.2% in March, services up 0.1%.
- Mining, quarrying, oil & gas extraction rose 2.2%; oil & gas extraction (except oil sands) +2.7%; oil sands extraction +1.4%.
- Coal mining surged +16.8% in March; metal ore mining +1.7%; gold & silver ore mining fell −3.1%.
- Construction rose +0.5%: residential buildings +1.3%, non-residential +1.5%.
- Utilities dropped −4.1%; electric power generation and transmission −4.3%.
- Manufacturing declined −0.4% in March; chemical manufacturing −6.1%, machinery −3.8%, transportation equipment +3.1%.
- Retail trade +0.8%; motor vehicle & parts dealers +4.0%.
- GDP declined −0.1% in April 2025; goods sectors −0.6%, services +0.1%.
- Manufacturing’s April contraction was the deepest since April 2021.