Canada’s GDP Shrank 0.1 Percent in April After Manufacturing Declines: StatCan

Canada’s gross domestic product (GDP) fell by 0.1 percent in April, mostly due to declines in the manufacturing sector, according to Statistics Canada.

The manufacturing sector fell by 1.9 percent in April, the agency said in a June 27 report, which was the largest drop since April 2021, when many countries were grappling with pandemic-related supply chain issues. StatCan said the decline was reflected in both durable and non-durable goods.

For durable goods, which fell by 2.2 percent, the transportation sector was primarily responsible for the fall in Canada’s GDP. That sector declined by 3.7 percent, with motor vehicle manufacturing taking a large hit due to manufacturers scaling back production and lowering exports due to U.S. tariffs.

April marked the first full month of tariffs from the United States in many sectors—particularly targeting Canada’s steel, aluminum and automotive industries.

Non-durable goods manufacturing declined by 1.6 percent in April, with food petroleum, and coal manufacturing contributing the most to the decrease. Food fell by 3.6 percent, while petroleum and coal fell by 5.9 percent, as refineries and petroleum producers undertook maintenance tasks.

Wholesale trade also fell in April, declining by 1.9 percent mainly due to motor vehicle and motor vehicle parts, and accessories declined by 6.8 percent. Machinery, equipment and supplies also fell by 1.6 percent.

Meanwhile, finance and insurance sectors saw a 0.7 percent increase, as the announcement of global U.S. tariffs on April 2 resulted in “unusually high activity on Canadian equity markets in April,” StatCan said.

The public sector, which comprises educational services, health care, and social assistance, grew by 0.4 percent in April, while the arts, entertainment and recreation sector increased by 2.8 percent. 

The mining, quarrying, and oil and gas extraction sectors were essentially unchanged in April as declines were offset by an increase in support activities for those industries.

According to advanced estimates by StatCan, the country’s GDP decreased by 0.1 percent in May. While real estate, rental, and leasing grew that month, oil and gas extraction, mining, public administration, and retail trade declined.

The U.S. has placed a series of tariffs on Canada, including 25 percent tariffs on all exports not covered under the United States-Mexico-Canada Agreement, 25 percent tariffs on automobiles, 10 percent tariffs on Canadian energy and potash, and 50 percent tariffs on steel and aluminum.

The Bank of Canada said in its monetary policy report released in January that if the United States imposed 25 percent tariffs on all countries, including Canada, then the country would face severe economic harm.

The “illustrative scenario” found that Canadian exports to the United States would fall, business investment would decline, the value of the Canadian dollar would fall further, and inflation would rise. Over time, the Bank said, Canada would also face a “permanent” decline in its GDP.