Economic and Social Reports
Recent developments in the Canadian economy: Spring 2025
DOI: https://doi.org/10.25318/36280001202500500005-eng
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This article provides an integrated summary of recent economic developments, highlighting key movements in the economic data during late 2024 and early 2025. The article focuses on how economic conditions have changed as households and businesses began adjusting to ongoing uncertainty over Canada’s trading relationship with the United States. It also highlights longer term trends related to Canada’s economic resiliency and the potential exposure of Canada to major changes in Canada-U.S. economic relations. The report is based on data that are publicly available as of May 9, 2025.
For up-to-date information on Canada-U.S. developments, please visit Focus on Canada and the United States. Monthly information on government, business, and financial market developments, including detailed information on tariffs and countermeasures, is available at Canadian Economic News (Statistics Canada n.d.). An integrated data module designed to support the analysis of current economic conditions, which includes monthly summaries for selected economic indicators, is available at Canadian Economic Tracker (Statistics Canada n.d.).
End of text boxStronger economic momentum before the trade conflict
Much of the headline economic data for late 2024 and early 2025 pointed to modest improvements in economic conditions before the escalation of the trade conflict with the United States. The economy was expanding at a steady pace during the second half of 2024 while the composition of growth, in the fourth quarter, had become more balanced with household spending, exports, and business investment all making sizable contributions to the increase in real GDP (Chart 1). Final domestic demand, a measure of total consumption and investment activity, rose at its fastest pace in over three years in late 2024 (+1.4%) as outlays increased across many expenditure and asset categories. At the same time, real GDP per capita increased 0.2%, while business labour productivity posted its largest increase (+0.6%) in four quarters. Economy-wide output rose in five of the last six months of 2024 and then strengthened in January 2025 on higher goods production (Chart 2). Higher output in construction and oil and gas extraction supported growth in recent months while retail volumes trended higher during the second half of 2024. Measured year-over-year, economy-wide output was up 2.3% in January 2025, the fastest pace in nearly two years.
Data table for Chart 1
| Q3 2024 | Q4 2024 | |
|---|---|---|
| percentage point contribution | ||
| Notes: Data on gross domestic product are quarterly percentage changes; all other data are percentage-point contributions to the the quarterly change in real GDP.
Source: Statistics Canada, table 36-10-0104-01. |
||
| Gross domestic product at market prices | 0.5 | 0.6 |
| Household final consumption expenditure | 0.5 | 0.7 |
| Business investment - residential structures | 0.1 | 0.3 |
| Business investment - non-residential | -0.2 | 0.2 |
| General governments final consumption expenditure | 0.0 | 0.1 |
| Investment in inventories | -0.3 | -0.8 |
| Exports of goods | 0.0 | 0.7 |
| Imports of goods | 0.2 | -0.5 |
Data table for Chart 2
| All industries | Goods-producing industries | Service-producing industries | |
|---|---|---|---|
| index (January 2023=100) | |||
| Source: Statistics Canada, table 36-10-0434-01. | |||
| 2023 | |||
| January | 100.0 | 100.0 | 100.0 |
| February | 100.2 | 100.3 | 100.2 |
| March | 100.5 | 100.6 | 100.5 |
| April | 100.5 | 100.6 | 100.4 |
| May | 100.5 | 99.6 | 100.9 |
| June | 100.4 | 99.7 | 100.7 |
| July | 100.4 | 99.7 | 100.7 |
| August | 100.6 | 99.7 | 100.9 |
| September | 100.5 | 99.3 | 101.0 |
| October | 100.7 | 99.5 | 101.2 |
| November | 100.9 | 100.1 | 101.2 |
| December | 100.7 | 99.9 | 101.0 |
| 2024 | |||
| January | 101.0 | 98.9 | 101.8 |
| February | 101.5 | 99.6 | 102.2 |
| March | 101.5 | 99.6 | 102.2 |
| April | 101.9 | 100.0 | 102.6 |
| May | 102.0 | 100.2 | 102.7 |
| June | 102.0 | 99.9 | 102.8 |
| July | 102.1 | 99.8 | 103.1 |
| August | 102.3 | 99.8 | 103.2 |
| September | 102.5 | 99.8 | 103.6 |
| October | 102.9 | 100.5 | 103.8 |
| November | 102.6 | 99.9 | 103.7 |
| December | 102.9 | 100.2 | 103.9 |
| 2025 | |||
| January | 103.3 | 101.3 | 104.1 |
| February | 103.0 | 100.7 | 104.0 |
Employment growth also picked up in the months before the trade conflict intensified. Cumulative employment gains from November to January totaled over 210,000, over two-thirds of which reflected increases in full-time work. The employment rate—the portion of working-age people who are employed—edged higher from November to January after declining steadily over much of the past two years (Chart 3).
Data table for Chart 3
| Unemployment rate (LHS) | Employment rate (RHS) | |
|---|---|---|
| percent | ||
| Source: Statistics Canada, table 14-10-0287-01. | ||
| 2023 | ||
| January | 5.1 | 62.5 |
| February | 5.1 | 62.5 |
| March | 5.0 | 62.5 |
| April | 5.1 | 62.5 |
| May | 5.2 | 62.3 |
| June | 5.4 | 62.3 |
| July | 5.5 | 62.2 |
| August | 5.5 | 62.2 |
| September | 5.5 | 62.2 |
| October | 5.7 | 62.1 |
| November | 5.7 | 62.0 |
| December | 5.8 | 61.9 |
| 2024 | ||
| January | 5.7 | 61.8 |
| February | 5.9 | 61.7 |
| March | 6.1 | 61.6 |
| April | 6.2 | 61.6 |
| May | 6.3 | 61.4 |
| June | 6.4 | 61.3 |
| July | 6.4 | 61.1 |
| August | 6.7 | 61.0 |
| September | 6.6 | 61.0 |
| October | 6.6 | 60.8 |
| November | 6.9 | 60.9 |
| December | 6.7 | 61.0 |
| 2025 | ||
| January | 6.6 | 61.1 |
| February | 6.6 | 61.1 |
| March | 6.7 | 60.9 |
| April | 6.9 | 60.8 |
Pressures on affordability eased as borrowing costs edged lower and incomes continued to rise. By late 2024, the ratio of household credit market-debt to disposable income was down substantially from 2023 levels, while the household debt service ratio fell to its lowest level in seven quarters (Chart 4). Steady income growth in the household sector has provided some relief from elevated living costs, while the growth in food prices and shelter costs has continued to moderate. Income growth has been broad-based with middle-income households posting substantial gains over the past year.
Data table for Chart 4
| Credit market debt to disposable income (LHS) | Debt service ratio (RHS) | |
|---|---|---|
| ratio | ||
| Notes: Estimates of credit market debt to disposable income are seasonally adjusted; estimates of the debt-to-asset ratio are not adjusted for seasonality.
Sources: Statistics Canada, tables 38-10-0238-01 and 11-10-0065-01. |
||
| 2007 | ||
| Q1 | 142.2 | 14.2 |
| Q2 | 147.1 | 14.5 |
| Q3 | 150.5 | 14.9 |
| Q4 | 152.0 | 15.0 |
| 2008 | ||
| Q1 | 152.7 | 14.8 |
| Q2 | 153.7 | 14.7 |
| Q3 | 154.0 | 14.5 |
| Q4 | 156.8 | 14.4 |
| 2009 | ||
| Q1 | 160.2 | 14.2 |
| Q2 | 162.4 | 14.1 |
| Q3 | 162.2 | 13.9 |
| Q4 | 163.5 | 13.8 |
| 2010 | ||
| Q1 | 161.9 | 13.8 |
| Q2 | 166.7 | 14.1 |
| Q3 | 166.1 | 14.1 |
| Q4 | 165.8 | 14.0 |
| 2011 | ||
| Q1 | 167.1 | 14.1 |
| Q2 | 169.3 | 14.2 |
| Q3 | 169.9 | 14.1 |
| Q4 | 168.5 | 14.0 |
| 2012 | ||
| Q1 | 168.8 | 13.9 |
| Q2 | 170.0 | 14.0 |
| Q3 | 169.6 | 14.0 |
| Q4 | 170.1 | 14.0 |
| 2013 | ||
| Q1 | 168.1 | 13.8 |
| Q2 | 169.0 | 13.8 |
| Q3 | 169.7 | 13.9 |
| Q4 | 169.6 | 13.8 |
| 2014 | ||
| Q1 | 170.2 | 13.8 |
| Q2 | 171.1 | 13.9 |
| Q3 | 170.3 | 13.9 |
| Q4 | 171.8 | 14.1 |
| 2015 | ||
| Q1 | 170.4 | 14.0 |
| Q2 | 171.4 | 13.9 |
| Q3 | 172.4 | 13.8 |
| Q4 | 174.5 | 13.8 |
| 2016 | ||
| Q1 | 181.5 | 14.2 |
| Q2 | 180.8 | 14.2 |
| Q3 | 180.8 | 14.1 |
| Q4 | 181.2 | 14.1 |
| 2017 | ||
| Q1 | 183.3 | 14.3 |
| Q2 | 182.4 | 14.3 |
| Q3 | 180.5 | 14.2 |
| Q4 | 180.6 | 14.3 |
| 2018 | ||
| Q1 | 182.6 | 14.6 |
| Q2 | 184.0 | 14.8 |
| Q3 | 184.6 | 14.9 |
| Q4 | 183.2 | 14.9 |
| 2019 | ||
| Q1 | 183.8 | 15.0 |
| Q2 | 181.9 | 15.0 |
| Q3 | 182.1 | 15.0 |
| Q4 | 181.2 | 14.9 |
| 2020 | ||
| Q1 | 181.0 | 14.6 |
| Q2 | 164.9 | 12.5 |
| Q3 | 174.3 | 13.4 |
| Q4 | 178.5 | 13.9 |
| 2021 | ||
| Q1 | 174.1 | 13.5 |
| Q2 | 178.4 | 13.7 |
| Q3 | 180.5 | 13.6 |
| Q4 | 185.7 | 13.8 |
| 2022 | ||
| Q1 | 183.8 | 13.7 |
| Q2 | 184.3 | 13.9 |
| Q3 | 185.1 | 14.3 |
| Q4 | 181.9 | 14.5 |
| 2023 | ||
| Q1 | 184.1 | 15.1 |
| Q2 | 182.0 | 15.1 |
| Q3 | 179.8 | 15.1 |
| Q4 | 179.1 | 15.1 |
| 2024 | ||
| Q1 | 178.3 | 15.0 |
| Q2 | 174.7 | 14.9 |
| Q3 | 172.4 | 14.6 |
| Q4 | 172.8 | 14.4 |
Long-run trends underscore challenges
While the changes noted above all point to positive developments before the trade conflict escalated, the longer-term trends related to productivity, competitiveness and affordability persist significant challenges as Canadians enter a period of disruption and adjustment. These trends have potential implications for the ability of businesses and households to withstand economic pressure stemming from a realignment of trade and investment between Canada and the United States. Canada’s weak track record on productivity amounts to a competitive disadvantage that can be expected to weigh on relative living standards over the longer term.Note Since the early 2000s, annual labour productivity growth among Canadian businesses has been less than half that observed in the United States, a gap that has continued to widen since the pandemic (Chart 5). Despite the increase in late 2024, Canada’s real GDP per capita remained below its pre-pandemic level while non-residential business investment, an important driver of long-term productivity growth, was almost 9% below its pre-COVID baseline when measured on a per capita basis (Chart 6).
Data table for Chart 5
| Canada | United States | |
|---|---|---|
| index (1981=100) | ||
| Source: Statistics Canada and U.S. Bureau of Labor Statistics. | ||
| 1981 | 100.0 | 100.0 |
| 1982 | 102.4 | 99.4 |
| 1983 | 105.8 | 102.8 |
| 1984 | 109.3 | 105.8 |
| 1985 | 110.6 | 108.2 |
| 1986 | 109.8 | 111.2 |
| 1987 | 110.8 | 111.8 |
| 1988 | 112.6 | 113.5 |
| 1989 | 113.1 | 114.8 |
| 1990 | 113.1 | 117.0 |
| 1991 | 112.9 | 118.9 |
| 1992 | 115.4 | 124.4 |
| 1993 | 117.5 | 124.5 |
| 1994 | 120.5 | 125.3 |
| 1995 | 121.8 | 126.1 |
| 1996 | 121.2 | 129.2 |
| 1997 | 125.2 | 132.0 |
| 1998 | 128.4 | 136.5 |
| 1999 | 133.4 | 142.1 |
| 2000 | 139.4 | 146.5 |
| 2001 | 141.6 | 150.4 |
| 2002 | 143.7 | 156.8 |
| 2003 | 144.3 | 162.7 |
| 2004 | 145.1 | 167.9 |
| 2005 | 148.2 | 171.6 |
| 2006 | 150.6 | 173.3 |
| 2007 | 150.9 | 176.1 |
| 2008 | 149.4 | 178.6 |
| 2009 | 147.8 | 185.9 |
| 2010 | 148.7 | 191.9 |
| 2011 | 152.1 | 191.6 |
| 2012 | 151.9 | 192.9 |
| 2013 | 154.8 | 195.0 |
| 2014 | 160.4 | 196.5 |
| 2015 | 160.0 | 198.8 |
| 2016 | 161.0 | 200.4 |
| 2017 | 163.5 | 203.0 |
| 2018 | 164.2 | 206.0 |
| 2019 | 164.4 | 210.5 |
| 2020 | 179.0 | 221.4 |
| 2021 | 170.1 | 226.2 |
| 2022 | 169.2 | 223.0 |
| 2023 | 165.6 | 227.2 |
| 2024 | 166.6 | 233.5 |
Data table for Chart 6
| Real non-residential business investment | Real non-residential business investment per capita | |
|---|---|---|
| index (Q1 2008=100) | ||
| Note: Non-residential business investment includes business outlays on non-residential structures and machinery and equipment.
Sources: Statistics Canada, tables 36-10-0104-01 and 17-10-0009-01. |
||
| 2008 | ||
| Q1 | 100.0 | 100.0 |
| Q2 | 100.2 | 100.0 |
| Q3 | 100.1 | 99.6 |
| Q4 | 95.2 | 94.3 |
| 2009 | ||
| Q1 | 80.6 | 79.7 |
| Q2 | 77.1 | 76.1 |
| Q3 | 77.8 | 76.5 |
| Q4 | 80.1 | 78.4 |
| 2010 | ||
| Q1 | 84.4 | 82.5 |
| Q2 | 88.5 | 86.3 |
| Q3 | 91.7 | 89.2 |
| Q4 | 96.3 | 93.3 |
| 2011 | ||
| Q1 | 99.0 | 95.8 |
| Q2 | 101.5 | 98.0 |
| Q3 | 101.8 | 98.0 |
| Q4 | 104.8 | 100.5 |
| 2012 | ||
| Q1 | 107.3 | 102.7 |
| Q2 | 110.7 | 105.8 |
| Q3 | 110.9 | 105.6 |
| Q4 | 113.3 | 107.5 |
| 2013 | ||
| Q1 | 115.4 | 109.3 |
| Q2 | 116.6 | 110.2 |
| Q3 | 117.3 | 110.5 |
| Q4 | 119.0 | 111.7 |
| 2014 | ||
| Q1 | 120.3 | 112.8 |
| Q2 | 121.4 | 113.6 |
| Q3 | 123.1 | 114.9 |
| Q4 | 125.6 | 116.7 |
| 2015 | ||
| Q1 | 115.0 | 106.8 |
| Q2 | 110.2 | 102.3 |
| Q3 | 106.1 | 98.2 |
| Q4 | 103.5 | 95.5 |
| 2016 | ||
| Q1 | 97.2 | 89.5 |
| Q2 | 95.6 | 87.8 |
| Q3 | 96.8 | 88.6 |
| Q4 | 91.9 | 83.8 |
| 2017 | ||
| Q1 | 94.9 | 86.4 |
| Q2 | 96.3 | 87.5 |
| Q3 | 96.8 | 87.6 |
| Q4 | 100.8 | 90.7 |
| 2018 | ||
| Q1 | 100.4 | 90.2 |
| Q2 | 102.0 | 91.3 |
| Q3 | 99.8 | 89.0 |
| Q4 | 99.4 | 88.2 |
| 2019 | ||
| Q1 | 104.5 | 92.5 |
| Q2 | 102.2 | 90.2 |
| Q3 | 104.7 | 92.0 |
| Q4 | 102.9 | 89.9 |
| 2020 | ||
| Q1 | 101.5 | 88.5 |
| Q2 | 82.1 | 71.4 |
| Q3 | 88.5 | 76.9 |
| Q4 | 91.1 | 79.2 |
| 2021 | ||
| Q1 | 91.7 | 79.6 |
| Q2 | 97.6 | 84.5 |
| Q3 | 97.6 | 84.3 |
| Q4 | 100.9 | 86.7 |
| 2022 | ||
| Q1 | 101.1 | 86.6 |
| Q2 | 104.0 | 88.8 |
| Q3 | 104.6 | 88.8 |
| Q4 | 102.9 | 86.6 |
| 2023 | ||
| Q1 | 104.1 | 87.1 |
| Q2 | 108.3 | 90.1 |
| Q3 | 103.6 | 85.5 |
| Q4 | 100.4 | 81.9 |
| 2024 | ||
| Q1 | 100.7 | 81.6 |
| Q2 | 103.9 | 83.7 |
| Q3 | 101.0 | 80.9 |
| Q4 | 103.0 | 82.1 |
Low levels of investment and sluggish productivity growth have direct implications for competitiveness. New research by Wang (2024) shows that Canada’s price competitiveness vis-à-vis the United States has deteriorated since the pandemic, with declining labour productivity in Canada driving up unit labour costs and adding to inflationary pressures. This underscores a key challenge: improvements in productivity are needed to support sustained increases in real earnings (and raise living standard over the long term), which in turn will be important for mitigating the affordability challenges that have built up since the pandemic. While these have eased over the past year, sustained cost-of-living pressures, particularly around housing and household essentials, remain front and centre for many families, raising questions about the degree of resilience to economic shocks stemming from major disruptions in Canada/U.S. relations.
The high degree of integration between Canada and the U.S. is important. In 2023, exports to the U.S. accounted for nearly 17% of Canada’s gross domestic product and 2.6 million jobs, including about 531,000 direct jobs in Canada’s manufacturing sector.Note About 13% of final household expenditures in Canada depend, either directly or indirectly, on imports from the United States, including almost one half of household outlays on new trucks, vans, and sport utility vehicles. Similarly, over 15% of the intermediate inputs purchased by Canadian industries come from U.S. producers, owing to the deep integration of Canada/U.S. supply chains. Manufacturing and construction industries are among the most reliant on U.S. suppliers for their supply of intermediate goods and services.
The cross-border financial flows that support income growth on both sides of the border also warrant emphasis. At the end of 2024, 60% of all of Canada's foreign financial assets and 53% of Canada’s liabilities to non-residents reflected investment relationships with the United States. Canada’s net foreign asset position—the amount by which Canada’s stock of financial assets in United States exceeds its cumulative liabilities to U.S. investors—totaled $1.8 trillion, accounting for 90% of Canada’s net asset position with the world. Over the past five years, all of the growth in Canada’s net asset position, an increase in our net financial assets with non-residents totaling about $1.3 trillion, came from the sharp rise in Canada’s investment holdings in the United States (Chart 7).
Data table for Chart 7
| United States | All countries excluding the United States | |
|---|---|---|
| billions of dollars | ||
| Source: Statistics Canada, table 36-10-0485-01. | ||
| 2014 | ||
| Q4 | -290.8 | 322.6 |
| 2015 | ||
| Q1 | -243.0 | 396.3 |
| Q2 | -215.3 | 394.6 |
| Q3 | -84.4 | 355.1 |
| Q4 | 2.2 | 445.1 |
| 2016 | ||
| Q1 | -50.0 | 332.4 |
| Q2 | -55.3 | 308.8 |
| Q3 | -41.2 | 343.1 |
| Q4 | 2.5 | 405.7 |
| 2017 | ||
| Q1 | 38.1 | 478.1 |
| Q2 | 58.8 | 503.0 |
| Q3 | 18.3 | 547.7 |
| Q4 | 109.5 | 657.1 |
| 2018 | ||
| Q1 | 196.2 | 650.7 |
| Q2 | 249.0 | 601.7 |
| Q3 | 279.4 | 607.9 |
| Q4 | 190.2 | 425.6 |
| 2019 | ||
| Q1 | 164.4 | 448.0 |
| Q2 | 119.9 | 442.8 |
| Q3 | 180.3 | 394.9 |
| Q4 | 235.2 | 455.7 |
| 2020 | ||
| Q1 | 409.0 | 246.5 |
| Q2 | 539.2 | 296.5 |
| Q3 | 522.8 | 341.3 |
| Q4 | 643.2 | 493.7 |
| 2021 | ||
| Q1 | 613.1 | 538.7 |
| Q2 | 703.5 | 515.2 |
| Q3 | 782.2 | 476.5 |
| Q4 | 842.4 | 546.7 |
| 2022 | ||
| Q1 | 670.4 | 378.4 |
| Q2 | 612.4 | 117.7 |
| Q3 | 727.2 | 23.2 |
| Q4 | 753.2 | 301.8 |
| 2023 | ||
| Q1 | 956.9 | 226.8 |
| Q2 | 1009.5 | 266.3 |
| Q3 | 988.9 | 248.3 |
| Q4 | 1147.9 | 275.9 |
| 2024 | ||
| Q1 | 1449.7 | 208.2 |
| Q2 | 1614.1 | 178.5 |
| Q3 | 1617.6 | 210.4 |
| Q4 | 1789.8 | 204.8 |
Developments as tariff threats intensify
Table 1 reports tariff-related developments from February to early April when the U.S. administration threatened blanket tariffs and imposed sector-specific levies on steel, aluminum, and autos. During this period, the Canadian government responded at various stages with selected countermeasures.
| Date | Description |
|---|---|
| Note: More detailed information on tariffs announcements are available at Canadian Economic News. | |
| February 1 | The U.S. administration announced its intention to implement a 25% tariff on imports from Canada, with a 10% levy on energy products. The Canadian government announces $155 billion in countermeasures. |
| February 2 | Both countries agree to delay the imposition of tariffs (the U.S. government announces a one-month reprieve). |
| February 10 | The U.S. administration announces its intention to restore a 25% tariff on imports of steel products and elevate tariffs on imports of aluminum products to 25%, effective March 12. |
| February 13 | The U.S. administration announces its intention to impose “Fair and Reciprocal Plan” to address non-reciprocal trade arrangements. |
| March 4 | The U.S. administration imposes blanket 25% tariffs on imports from Canada, 10% on energy products, critical minerals, and potash. Canada proceeds with 25% tariffs on $30 billion of U.S. imports, with tariffs on an additional $125 billion to be phased in later in the month. |
| March 6 | U.S. announces a one-month reprieve for CUSMA-compliant imports. Canadian tariffs on the $30 billion in U.S. imports remain in effect. |
| March 12 | 25% tariffs on U.S. imports of Canadian steel and aluminum come into effect. Canada imposes tariffs on an additional $30 billion of U.S. imports. |
| March 26 | U.S. announces 25% tariffs on auto imports from Canada, effective April 3. |
| April 2 | The U.S. administration announces reciprocal, country-specific tariff rates on many U.S. trading partners; Canada is excluded from the list of countries facing a blanket, reciprocal tariff rate. |
The escalation of trade tensions has weighed heavily on business and consumer sentiment. The Bank of Canada’s first quarter Business Outlook Survey, based on data collected during February, found that many companies were delaying decisions related to hiring and investment, while anticipating upward pressure on costs and selling prices if tariffs come into effect. The Bank’s Survey of Consumer Expectations also found that the trade conflict was leading many consumers to spend more cautiously in light of growing labour market and financial uncertainty.
Trade with the U.S. ramps up as tariff threats intensify
Tariff threats can influence trading patterns, providing importers with an incentive to increase shipments prior to the implementation of tariffs to avoid higher costs. Merchandise trade flows between Canada and the United States accelerated as tariff threats began to intensify. Merchandise exports to the U.S. expanded by 13.6% from November to January. Shipments of motor vehicles and parts, over 90% of which go to the United States, reached a twenty-five-year high in January, while exports of energy products, consumer goods and industrial machinery and equipment also rose on higher shipments to U.S. purchasers. As trade tensions between the two countries began to intensify in February, exports to the U.S. pulled back 3.4%. Shipments to the United States contracted an additional 6.6% in March but remained 2.5% higher than levels in November 2024 (Chart 8).
Imports from the U.S. rose in January and February before pulling back in March. Shipments from the U.S. in March were 2.7% higher than in November. Canada’s merchandise trade surplus rose to $13.8 billion in January before narrowing to $10.8 billion in February and $8.4 billion in March. During 2024, Canada’s monthly merchandise trade surplus with the U.S. averaged $8,5 billion.
Data table for Chart 8
| Exports | Imports | |
|---|---|---|
| index (January 2024=100) | ||
| Source: Statistics Canada, table 12-10-0011-01. | ||
| 2024 | ||
| January | 100.0 | 100.0 |
| February | 104.6 | 102.6 |
| March | 101.2 | 101.6 |
| April | 103.1 | 103.5 |
| May | 103.4 | 102.2 |
| June | 104.3 | 104.2 |
| July | 105.8 | 101.0 |
| August | 101.0 | 102.0 |
| September | 102.1 | 102.4 |
| October | 100.2 | 102.7 |
| November | 107.0 | 107.2 |
| December | 113.1 | 106.4 |
| 2025 | ||
| January | 121.6 | 110.9 |
| February | 117.4 | 113.4 |
| March | 109.7 | 110.1 |
Steep declines in travel to the United States
Cross border travel between Canada and the United States scaled back as tariff threats intensified. Canadian resident return trips by auto from the U.S., measured year-over-year, were down 23.0% in February, while return trips by air by residents fell 13.3%. Travel to U.S. destinations continued to pull back in March. Canadian resident return trips by auto were down 31.9% year-over-year, while resident return trips by air contracted 13.5%. Same-day auto travel, which expanded consistently on a year-over-year basis throughout 2024, fell abruptly as tariff threats escalated, and was down 36.0% year-over-year in March (Chart 9). Travel to Canada by U.S. residents has also pulled back. In March, U.S. resident trips by automobile fell 0.6%, the second consecutive month over month decline.
Data table for Chart 9
| Excursionists (same-day) | Tourists (overnight) | |
|---|---|---|
| year-over-year percentage change | ||
| Note: Red line indicates the beginning of the new United States administration.
Source: Statistics Canada, table 24-10-0057-01. |
||
| 2024 | ||
| January | 13.4 | 8.2 |
| February | 25.7 | 10.5 |
| March | 26.3 | 19.0 |
| April | 16.5 | -2.4 |
| May | 18.7 | 2.8 |
| June | 11.5 | 14.5 |
| July | 4.8 | 2.4 |
| August | 6.6 | 3.4 |
| September | 7.1 | 9.8 |
| October | 7.9 | -2.6 |
| November | 9.9 | -1.9 |
| December | 1.8 | 17.8 |
| 2025 | ||
| January | 4.3 | -10.0 |
| February | -25.7 | -16.7 |
| March | -36.0 | -25.6 |
Economy-wide output contracts in February
Real gross domestic product contracted 0.2% in February as declines in oil and gas extraction, transportation, and real estate activity were partly offset by increases in manufacturing and finance. Overall, twelve out of twenty industrial sectors posted declines. Several of the main downward contributors in February reflected events that were not related to the trade conflict.
After ramping up in December and January, production in the oil sands posted its largely monthly contraction since the start of 2024. Oil and gas extraction, excluding the oil sands, also declined in February. Activity in transportation industries fell as adverse weather conditions affected rail and transit operations.
Activity at real estate agents and brokers fell 10.4% in February, the third consecutive decline. The pullback aligns with the view that potential homebuyers are adopting a more cautious stance in the face of rising uncertainty.
Retail volumes declined for the second consecutive month in February on lower activity at motor vehicle and parts dealers. Despite the declines, retail volumes remain elevated, following the outsized increase (+2.6%) at the end of 2024. Volumes in February were 1.0% higher than levels in November and up 2.9% year-over-year.
Manufacturing output increased 0.6% in February after rising 1.0% to start the year. Higher output at machinery manufacturing plants supported the increase, while activity at primary metal producers pulled back following a sizable increase January. One half of value-added produced by machinery manufacturers can be attributed to exports to the United States; among primary metal producers, the value-added share coming from U.S. exports rises to 61%.Note Auto parts manufacturers also increased production in February as export demand for engines and parts rose.
Escalating trade tensions led to sharp increase in financial market activity in February, coinciding with a large divestment of Canadian shares on the part of non-residents.
Statistics Canada’s advance estimate suggests that real gross domestic product edged up 0.1% in March.
No employment growth from February to April
After remaining virtually unchanged in February, employment declined in March (-33,000) and then was little changed in April (+7,400) as trade tensions continued to intensify. Manufacturing employment fell by 31,000 in April, the first major pull back in this industry since November 2024. Employment in wholesale and retail was down 27,000 in April, similar to the decline in March. Employment rose in public administration (+37,000), mostly in temporary work related to the federal election. The unemployment rate increased to 6.9% in April, while the employment rate edged down to 60.8%, matching its recent low in October 2024.
While the trade conflict has negatively impacted business sentiment, there was little indication from April’s labour report that the weaker outlook had been accompanied by a substantial rise in layoffs. Among those employed in March, 0.7% became unemployed in April due to a layoff. This proportion was similar to the same period in 2024 (0.6%).
New survey data examines the impact of tariffs on businesses
A large amount of information on Canada/U.S. developments will be available over the coming months. Statistics Canada’s Canadian Survey on Business Conditions for the second quarter of 2025, to be released in late May, will provide new data on the potential impacts of tariffs as the trade conflict continues to unfold. These include estimates of the share of business sales made directly to U.S. customers and the share of business purchases made directly from U.S. suppliers. The survey also collects information on the mitigation strategies that businesses in different sectors have adopted to reduce the impact of tariff risks. Additional summaries of key changes in the macroeconomic data as they relate to Canada/U.S. developments will be released on a monthly basis in Statistics Canada’s Canadian Economic Tracker.
Authors
Guy Gellatly and Carter McCormack are with the Strategic Analysis, Publications and Training Division, Analytical Studies and Modelling Branch at Statistics Canada.
References
Bank of Canada. Business Outlook – First quarter of 2025. Published April 7, 2025.
Bank of Canada. Canadian Survey of Consumer Expectation. Published April 7, 2025.
Statistics Canada. 2024. Research to Insights: Challenges and Opportunities in Innovation, Technology Adoption and Productivity. Catalogue no. 11-631.
Statistics Canada. 2025. Research to Insights: Perspectives on Affordability and Inequality. Catalogue no. 11-631.
Wang, W. 2025. Unit labour costs growth, inflation and productivity growth in Canada and the United States. Economic and Social Reports. Catalogue no. 36-28-0001. Ottawa: Statistics Canada.
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