Canada’s economy shrank by 0.1 per cent on a monthly basis in April, Statistics Canada said on Friday, with the data agency’s advance estimate for May showing a similar decline in activity.
The manufacturing sector alone dipped 1.9 per cent — the steepest drop since April 2021, per Statistics Canada — driving a decline among goods-producing industries.
Transportation equipment manufacturing was hit hard, which the data agency attributed to uncertainty caused by the trade war in the auto industry as car manufacturers pulled back on production in response to U.S. President Donald Trump’s tariff on vehicle exports.
Wholesale trade also fell in April, particularly in sub-sectors related to autos and motor vehicle parts, as exports and imports of those products dropped.
Investment activity largely drove the country’s economic growth in April, with the finance and insurance sector growing 0.7 per cent — specifically financial investment services, funds and other financial vehicles.
“The announcement of U.S. tariffs on April 2 heightened trade tensions and prospects of a global economic slowdown, leading to unusually high activity on Canadian equity markets in April,” noted Statistics Canada.
That led to a trading frenzy on the Toronto Stock Exchange in the four days that followed the announcement, which the data agency said was the “main contributor” to elevated activity in April.
Public sector activity also rose in April, mostly because of the federal election, while the arts, entertainment and recreation sector increased 2.8 per cent that month as several Canadian NHL teams qualified for the playoffs.
Read More: Canada’s GDP shrank in April, with hefty decline in manufacturing
