Statistics Canada (StatsCan) reported Canada’s gross domestic product (GDP) growth for February yesterday, along with providing an estimate for March. The data shows Canada’s economy likely expanded over the first quarter of 2026, despite ongoing trade tensions and the start of the conflict in the Middle East. Turning to the US, preliminary data showed its economy expanded in the first quarter, despite inflationary pressures accelerating in March.

• Canada’s economy grew by 0.2% in February, matching expectations, based on a survey of economists by Bloomberg. This added to the 0.1% growth in January, signalling Canada’s relative resiliency despite trade uncertainty.
• Stronger manufacturing activity and wholesale trade in February contributed to Canada’s overall growth. Conversely, retail trade pulled back over the month.
• StatsCan estimates that Canada’s GDP had no growth (0.0%) in March. Still, Canada’s economy likely expanded for the whole of the first quarter of 2026, reversing a contraction in the fourth quarter of 2025.
• In the US, the economy grew at an annualized pace of 2.0% in the first quarter of 2026, according to an advanced estimate. Government spending rose over the quarter, offsetting declines from net trade.
• Inflationary pressures in the US accelerated in March. The annual personal consumption expenditure price index (PCE) rose to 3.5% from 2.8% in February, marking its highest level in over three years. The PCE is the preferred inflation gauge of the US Federal Reserve Board.

The Canadian and US economies continue to demonstrate their relative resiliency despite trade and geopolitical tensions. Building inflationary pressures could put pressure on consumer and business activity in the months to come in both countries. Canada and the US, along with Mexico, continue to discuss trade as they work towards extending the Canada-United States-Mexico Agreement, which may help settle down some uneasiness about the outlook for Canada’s economy.

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