Key Moments:

• Canada’s real GDP fell by 0.2% in February, partially reversing January’s 0.4% gain.
• Industries relating to goods production contracted by 0.6%, driven by declines in mining and construction. In total, 12 out of Canada’s 20 industrial sectors experienced a contraction.
• After dipping to 1.3821 earlier on Wednesday, the USD/CAD exchange rate has stabilized around the 1.3835 level.

Monthly Drop Sharper Than Expected

Canada’s real gross domestic product (GDP) declined 0.2% in February compared to the previous month, Statistics Canada reported on Wednesday. This drop came in below forecasts, as MUFG had predicted no change for the month. The decline followed a 0.4% monthly gain in January.

Goods Production Leads Downturn

The contraction in February was largely due to a 0.6% decline in goods-producing industries. Within that segment, oil and natural gas extraction sectors were among the largest detractors to overall GDP. Other industries that drove the GDP lower had to do with mining, construction, quarrying, and mining.

Services Sector Also Slips

Canada’s services industry also dropped. However, its decline was more modest at 0.1%. Notable declines in transportation and warehousing were registered, and the same applied to real estate and leasing. Meanwhile, the finance and insurance sectors were among the few that managed to achieve gains.

Preliminary March Growth and Q1 Projection

Estimates from Statistics Canada indicate a 0.1% rise in real GDP for March. The projected increase was supported by gains in mining and various other sectors. However, declines in manufacturing and wholesale trade limited the overall growth. Based on this preliminary data, the Canadian economy is expected to have expanded by 0.4% in 2025’s first quarter.

USD/CAD Holds Steady

The USD/CAD exchange rate has been trading above the 1.3800 mark on Wednesday. At press time, it remains relatively flat at 1.3835, following an earlier drop to 1.3821.