Canada's GDP shrank in April, with hefty decline in manufacturing

Jenna Benchetrit · CBC News

· Posted: Jun 27, 2025 8:40 AM EDT | Last Updated: 2 hours ago

Canada's system shrank by 0.1 per cent connected a monthly basis in April, Statistics Canada said connected Friday, with the information agency's beforehand estimation for May showing a akin diminution successful activity.

The manufacturing assemblage unsocial dipped 1.9 per cent — the steepest driblet since April 2021, per Statistics Canada — driving a diminution among goods-producing industries.

Transportation instrumentality manufacturing was deed hard, which the information bureau attributed to uncertainty caused by the commercialized warfare successful the car manufacture arsenic car manufacturers pulled backmost connected accumulation successful effect to U.S. President Donald Trump's tariff connected conveyance exports.

Wholesale commercialized besides fell successful April, peculiarly successful sub-sectors related to autos and centrifugal conveyance parts, arsenic exports and imports of those products dropped.

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The information bureau is expecting economical maturation to declaration by 0.1 per cent again successful May, signalling slower maturation successful the 2nd 4th of the twelvemonth arsenic tariffs measurement connected Canada's economy.

Bank of Canada politician Tiff Macklem warned during the cardinal bank's past involvement complaint announcement that the interaction of tariffs would beryllium felt much acutely successful the 2nd quarter.

First-quarter growth, portion stronger than expected, was mostly driven by pre-emptive enactment arsenic businesses stocked up connected inventory up of Trump's tariffs. 

"Going forward, we proceed to expect the symptom from commercialized uncertainties volition enactment comparatively contained, leaving the system softer but not substantially worse disconnected by the extremity of this year," wrote Claire Fan, a elder economist astatine RBC.

"With astir of U.S.-Canada commercialized exempted from tariffs via an exemption for USMCA-compliant trade, Canada continues to look 1 of the lowest tariffs among large U.S. commercialized partners," she added.

"The broader commercialized headwind volition inactive dilatory U.S. request for imports, including for Canadian goods. But we expect Canadian home request to broadly clasp up, and the system to not autumn into a recession."

April trading frenzy drove growth

Investment enactment mostly drove the country's economical maturation successful April, with the finance and security assemblage increasing 0.7 per cent — specifically fiscal concern services, funds and different fiscal vehicles. 

"The announcement of U.S. tariffs connected April 2 heightened commercialized tensions and prospects of a planetary economical slowdown, starring to unusually precocious enactment connected Canadian equity markets successful April," noted Statistics Canada.

That led to a trading frenzy connected the Toronto Stock Exchange successful the 4 days that followed the announcement, which the information bureau said was the "main contributor" to elevated enactment successful April.

Public assemblage enactment besides roseate successful April, mostly due to the fact that of the national election, portion the arts, amusement and recreation assemblage accrued 2.8 per cent that period arsenic respective Canadian NHL teams qualified for the playoffs. 

"The expected back-to-back declines successful existent GDP done the outpouring are not a large surprise, fixed the aggravated uncertainty the system was dealing with astatine that time," wrote BMO main economist Douglas Porter successful a enactment to clients.

"Overall, we fishy that GDP apt drooped astatine astir a 0.5 per cent annual complaint for each of Q2, and whitethorn travel adjacent to that successful Q3 — surely not bully news, but besides a little dire result than expected a fewer months backmost astatine the tallness of the tariff drama."