Economic activity in Canada contracted by 0.2 percent in February, partially erasing January's unrevised 0.4 percent increase. This is below expectations for a flat reading in the Econoday survey of forecasters, with severe winter weather negatively affecting numerous sectors. Compared to February 2024, GDP rose 1.6 percent.

Activity in the goods-producing industries fell 0.6 percent following a 1.1 percent rise in January, as mining, quarrying, and oil and gas extraction and construction fueled the decline. Meanwhile tariffs-driven inventory building led to a 0.6 percent rise in manufacturing activity, with machinery manufacturing up 5.9 percent and auto parts production within that category surging by 4.2 percent.

Services-producing industries saw a 0.1 percent drop in February activity (offsetting January's 0.1 percent uptick). Contractions in transportation and warehousing (-1.1 percent) and real estate and rental and leasing (-0.4 percent) were partially offset by a 0.7 percent rise in finance and insurance. Retail trade saw a 0.2 percent dip following a 1.4 percent decline in January.

Canada saw 0.4 percent growth in January as things looked good pre-trade war. The call for February looks for no growth.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. In contrast to most industrialised countries a monthly estimate is provided derived from the value added by labour and capital in transforming inputs purchased from other producers into that industry's output. Data for the reference month are usually released close to the end of the second month after the reference period.

Instead of producing an advanced quarterly GDP figure and revising it the following two months, Statistics Canada releases monthly estimates of real GDP at Basic Prices. This release breaks down real output by seven goods-producing industries and twelve service-producing industries, and includes special aggregations such as business sector, non-business sector, and industrial production.

The sources of data used for monthly and quarterly estimates often differ and leads to very different estimates for certain items, such as price deflators. As a result, the monthly figures are not perfectly correlated with the quarterly numbers. However, the monthly data do give some idea of where the quarter is headed and especially in an uncertain environment, they are closely watched. While industrial production is closely watched in the U.S., it is not in Canada especially since the economy has become increasingly dominated by services. However, the goods sector is more vulnerable to wide swings in output compared to services, and exports remain dominated by industrial output.