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Development stalls, pulled down by retail commerce, oil and fuel extraction and actual property
Revealed Mar 28, 2025 • Final up to date 1 day in the past • 2 minute learn
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Canada’s gross home product knowledge was launched Friday. Photograph by The Canadian Press
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Canada’s economic system continued its sturdy momentum within the new 12 months, rising by 0.4 per cent in January, up from 0.3 per cent in December, however a flash estimate exhibits that momentum fading in February, Statistics Canada mentioned Friday.
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The month-to-month development in gross home product in January marks the strongest tempo since April 2024, with goods-producing industries like manufacturing, oil and fuel extraction and mining posting the biggest month-to-month features.
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Nevertheless, an early estimate exhibits momentum light in February, with Canadian development coming in flat throughout the month. Will increase in manufacturing, finance and insurance coverage had been offset by declines in retail commerce, oil and fuel extraction and the true property sector.
In the course of the March charge announcement, Financial institution of Canada governor Tiff Macklem mentioned the central financial institution expects financial development to sluggish within the first quarter of 2025, because the commerce battle weighs on sentiment and exercise, introduced on by a drop in enterprise and shopper confidence.
Previous January, “the outlook is turbulent. There are clear draw back dangers to Canada’s economic system, particularly as the specter of widespread tariffs appears imminent come April 2,” mentioned Marc Ercolao, economist with Toronto-Dominion Financial institution, in a notice.
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In January, the manufacturing sector rose 0.8 per cent, utilities had been up 2.7 per cent and development up 0.7 per cent, with residential constructing reaching its highest stage since November 2023. The oil and fuel extraction sector grew by 2.6 per cent, pushed by elevated exercise in Alberta’s oilsands.
The motorized vehicle and components wholesaler-distributors sector expanded 4.5 per cent throughout the month, reaching its highest stage since February 2020, as exports of autos elevated.
January’s outsized features in goods-producing sectors recommend “there was some front-running forward of the tariffs,” mentioned David Rosenberg, founder and president of Rosenberg Analysis Inc.
However the bump is historical past now, with actual GDP anticipated to “contract sharply” within the second quarter, the economist mentioned in a notice to shoppers.
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“A storm is coming to the Canadian economic system, and the Canadian greenback is a powerful promote,” he mentioned.
The Financial institution of Canada subsequent decides its rate of interest on April 16 and whether or not it cuts or holds will largely rely upon the reciprocal tariffs U.S. President Donald Trump pronounces on April 2.
Trump has already imposed tariffs on metal and aluminum, and this week introduced a 25-per-cent tariff on all foreign-made autos, set to take impact subsequent week.
Financial institution of Montreal chief economist Douglas Porter mentioned the sturdy begin to the 12 months is “chilly consolation” within the face of tariff threats.
“Nonetheless, the sturdy underpinning for development will reinforce the Financial institution of Canada’s newfound lean to the sidelines, barring a fabric deterioration within the outlook following subsequent week’s so-called reciprocal tariff bulletins,” he mentioned in a notice.
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