Manufacturing sector has fastest pace of growth in 3 years; GM investing $691 million in Ontario plant
Canada’s economy picked up in February as a resurgent manufacturing sector drove another month of growth and pointed to fresh challenges – and opportunities – for HR leaders in industrial workplaces.
Real gross domestic product grew 0.2 per cent in February, the fourth consecutive monthly gain, as goods-producing industries again outpaced services, reported Statistics Canada. The agency’s figures show goods output rising 0.4 per cent in the month, compared with a 0.1 per cent increase for services-producing industries.
Real GDP by industry is now on track for a 0.4 per cent advance in the first quarter of 2026, according to StatsCan’s April 30 report.
Surge in manufacturing, motor vehicle and parts output
Manufacturing was the standout story. StatsCan reported that overall manufacturing activity rose 1.8 per cent in February, the fastest pace since early 2023. Durable goods producers led the way, with machinery manufacturing surging 8.7 per cent as industrial and metalworking machinery makers benefited from stronger export demand. Transportation equipment manufacturing climbed 5.5 per cent, helped by a sharp rebound in motor vehicles and parts.
Motor vehicle and parts output jumped 9.8 per cent in February, including a 20.4 per cent gain in motor vehicle manufacturing and solid increases in parts production. Several auto assembly plants in Ontario ramped up after shutdowns for retooling and model changes earlier in the year, a sign that investment in new product lines is beginning to translate into higher production, said StatsCan.
Wholesale trade and transportation and warehousing also strengthened in February, reflecting the easing of bottlenecks in the automotive supply chain. Motor vehicle and parts wholesalers saw a 6.1 per cent increase in activity, while truck transportation posted its largest gain since 2021 as freight movements picked up, according to the report.
Despite the gains by the auto industry and the manufacturing sector in February, tarrifs and global uncertainty remain a drag on the economic outlook, according to Alan Arcand, Chief Economist at Canadian Manufacturers & Exporters.
"February’s rebound in manufacturing reflects a temporary lift rather than a clear turning point, with output boosted by several auto assembly plants ramping up production following extended shutdowns in January," says Arcand. "Year over year, manufacturing output is down 3.1% and employment has fallen by 44,000, underscoring the negative impact of unjustified US tariffs and elevated uncertainty from constantly shifting US trade policy."
"Until those underlying pressures ease, manufacturers are likely to remain cautious, which points to a subdued outlook for production, investment, and employment," he adds.
Overall economic growth in first quarter
True to Arcand's concerns, there are signs overall momentum is moderating. StatsCan’s advance estimate points to essentially flat GDP in March and implies the economy grew at an annualized rate of about 1.7 per cent in the first quarter, following a contraction of 0.6 per cent in the fourth quarter of 2025. This pace would be slightly stronger than the Bank of Canada’s most recent 1.5 per cent forecast, according to the Canadian Press.
For HR executives in manufacturing and related sectors, the combination of modest macroeconomic growth and outsized gains in factory output presents a complex planning environment.
On the one hand, the rebound in machinery, auto and other durable goods suggests renewed hiring pressure in skilled trades, maintenance, engineering, and production supervision. Plants that shut lines for retooling are now bringing them back on stream, creating immediate needs for trained operators while also demanding new capabilities linked to automation and quality systems. HR teams may need to accelerate apprenticeship and upskilling programs, tap immigration pathways and rethink retention strategies for hard‑to‑replace technical talent.
Manufacturing growth offset by weaknesses elsewhere
On the other hand, an economy expanding only slightly faster than the central bank expected leaves limited room for across‑the‑board headcount growth or aggressive wage escalation. With StatsCan’s data showing weakness in parts of the public sector and in arts, entertainment, and recreation, HR leaders in diversified organizations may find themselves balancing hiring in growth areas like manufacturing and logistics against softer demand elsewhere.
The regional angle also matters. Ontario’s auto corridor appears to be at the centre of February’s manufacturing surge, as auto plants and their suppliers capitalize on earlier capital spending and strong North American vehicle demand. General Motors announced this week that it will invest $691 million in its St. Catherines, Ont., engine plant that will join two plants in the U.S. making V-8 engines for full-sized trucks and SUV, CBC News reported.
