TORONTO, February 25, 2026 – Today, the Financial Accountability Office of Ontario (FAO) released a report that provides an overview of the latest trends in the Ontario economy from July to December 2025.
Ontario’s real Gross Domestic Product (GDP), the broadest measure of economic activity, increased by 0.5% in the third quarter of 2025, rebounding from a 0.7% decline in the second quarter when the imposition of US tariffs began to impact Ontario’s economy. The rise in real GDP in the third quarter reflected an improvement in the province’s net trade and a gain in residential investment as housing market activity increased.
The latest economic indicators suggest Ontario’s economy was little changed in the fourth quarter of 2025, with gains in employment and net trade met with declines in retail sales, manufacturing sales, wholesale trade and the housing market.
The FAO’s latest Economic and Budget Outlook projected that Ontario’s annual real GDP growth would slow from 1.6% in 2024 to 1.3% in 2025. Economic activity in the fourth quarter of 2025 is largely consistent with this projection. The FAO will continue to monitor Ontario’s economic performance and will update its forecast for economic growth in its next Economic and Budget Outlook report.
To learn more, read the full report here.
Quick Facts:
- Employment in Ontario increased by a strong 58,900 (or 0.7%) in 2025 Q4, an improvement after weak job performance in the previous two quarters.
- Ontario’s unemployment rate edged down 0.2 percentage points to 7.6% in 2025 Q4, the first quarterly drop in almost three years.
- Housing starts in 2025 Q4 totalled 16,800 units in Ontario, a decline of 10.7% from 2025 Q3, following two consecutive quarterly increases. Housing starts in 2025 totalled 65,400, the lowest number of annual starts since 2014.
- Manufacturing sales have struggled over the last several years, declining in six of the past nine quarters, by a total of 7.4% since mid-2023, reflecting reduced activity in auto assembly for retooling and the impact of US tariffs.
- Excluding gold, Ontario’s goods exports to the US decreased by 4.0% in 2025, while goods exports to the rest of the world increased by 17.0%. Similarly, Ontario’s goods imports from the US declined by 4.3% in 2025, while goods imports from the rest of the world rose by 8.6%.
About the FAO
Established by the Financial Accountability Officer Act, 2013, the Financial Accountability Office of Ontario (FAO) provides independent analysis on the state of the Province’s finances, trends in the provincial economy and related matters important to the Legislative Assembly of Ontario.
Visit our website or follow us on X and LinkedIn for more information on our reports.
-30-
For further information, please contact:
Sophia Zhu l 416 931 5498 l SZhu@fao-on.org l fao-on.org