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May 29, 2026CANADIAN ECONOMIC ACCOUNTS, Q1 
Canada’s Real Gross Domestic Product (GDP) contracted at a seasonally adjusted annualized rate of 0.1% (all figures seasonally adjusted at annual rates) in the first quarter of 2026, following a 1.0% decline in Q4 2025. Canada's real GDP has contracted in three of the last four quarters.
The decline was primarily driven by lower real exports, higher imports (which are subtracted from GDP) and government consumption expenditures as well as declines in all major fixed capital investment categories: residential, non-residential and government. These declines were partially offset by higher consumer spending and inventory accumulation.
Household consumption growth rose at a seasonally adjusted annualized rate of 1.5% in Q1 2026. Higher spending on food and financial services was partially offset by lower expenditure on new passenger vehicles and travel. Government consumption expenditures contracted by 1.0%.
Residential investment decreased by 7.9% in Q1 2026, driven by weakness in resale activity (ownership transfer costs) as well as a slight decline in new construction.
Non-residential investment fell by 3.2% in Q1 on lower investment in engineering structures, which was partially offset by rising business investment in machinery, mineral exploration, software and non-residential buildings.
Government investment was down 9.6% in Q1 2026, driven by a decrease in government investment in weapons systems. Government investment remains well above long run averages.
Exports edged down 0.5% in Q1, as falling exports of passenger vehicles and light duty trucks offset rising energy exports. Near the end of the quarter, oil prices increased dramatically with the start of the conflict in Iran. Imports rose by 12.0% in Q1, as higher imports of gold, passenger cars/light trucks and industrial machinery substantially offset falling imports of pharmaceuticals and travel products.
Investment in inventories rebounded with a $10.6 billion net accumulation in Q1 2026. Rising accumulation of (mostly imported) gold and manufactured goods offset retail and wholesale drawdowns.
Nominal GDP grew at a seasonally adjusted annualized rate of 4.6% in Q1 2026, following a 3.0% growth in Q4 2025.
The overall GDP deflator (reflects overall price of domestically produced goods and services) grew 4.6% from the previous quarter on rising prices for oil. The previous quarter's deflator growth was revised up to 4.1%. Import prices rose more slowly than export prices, resulting in a 2.3% (non-annualized) increase in Canada's terms of trade.
Employee compensation (measured in current prices, not real volumes) was up by a seasonally adjusted annualized rate of 4.8% in Q1. Wages growth in professional/personal services and health care were partially offset by declines in federal public administration and finance/real estate wages.
Including mixed income from unincorporated businesses, property income (such as interest and dividends from financial assets), current transfers (such as CPP and EI) with employee compensation, Canada's overall household income grew at a seasonally adjusted annualized rate of 1.7% in Q1 2026.
The household savings rate decreased 0.2 percentage points to 3.5% of disposable income in Q1, the lowest value since 2023.
Net operating surplus for corporations grew at a 9.6% seasonally adjusted annualized rate, as energy sector income increased on higher oil prices. There were also notable increases in net income for mining and financial companies. Net mixed income of unincorporated businesses was down 7.8% in Q1.
Source: Statistics Canada. Table 36-10-0103-01 Gross domestic product, income-based, quarterly (x 1,000,000), Table 36-10-0104-01 Gross domestic product, expenditure-based, Canada, quarterly (x 1,000,000), Table 36-10-0112-01 Current and capital accounts - Households, Canada, quarterly; Table: 36-10-0106-01 Gross domestic product price indexes, quarterly