Ontario's gross domestic product (GDP) is the largest of any Canadian province, accounting for approximately 38.5% of the national total. In 2026, Ontario's GDP reached $909.3 billion, with growth of 2.2% over the preceding five-year period. The provincial economy is highly diversified, with major contributions from manufacturing, finance, and real estate sectors. Understanding Ontario's economic performance is crucial for assessing national economic health, business investment, and labour market conditions across Canada.
The Scale and Composition of Ontario's Economy
Ontario's economic output solidifies its position as the engine of the Canadian economy. With a GDP of $909.3 billion in 2026, the province's economic scale is immense. Its 38.5% share of national GDP means its performance directly influences Canada's overall economic trajectory. The economy is not reliant on a single industry but is instead broadly diversified across multiple sectors. This diversification provides a degree of stability, though certain industries face significant external pressures, particularly from international trade dynamics. The largest industries by revenue in Ontario are Commercial Banking, New Car Dealers, and Gasoline & Petroleum Wholesaling. In 2026, these sectors generated $210.4 billion, $69.2 billion, and $58.6 billion respectively. The Real Estate & Rental & Leasing, Finance & Insurance, and Manufacturing sectors together contributed 32.8% of provincial GDP in that same year. From an employment perspective, the Retail Trade, Manufacturing, and Accommodation & Food Services sectors are the largest, collectively accounting for 38.8% of all jobs in the province. These figures illustrate the complex interplay between high-value financial sectors and large-employer service and manufacturing industries that define Ontario's economic structure.
Recent Economic Performance and Quarterly Trends
Ontario's economic growth has been modest in recent years, with periods of contraction. Real GDP, which measures the value of economic output adjusted for inflation, decreased by 0.3% in the fourth quarter of 2025. This marked the second decline in three quarters, largely driven by a reduction in business inventories and a 3.5% drop in residential investment. These declines were partially offset by increases in household consumption of 0.6% and government consumption of 0.6%, as well as government investment which grew by 3.7%. For the entire year of 2025, real GDP grew by 1.3%, led by household expenditure growth of 2.3% and government spending growth of 2.9%. Nominal GDP, which includes the effects of price changes and is a key measure of the tax base, grew by 4.2% in 2025. This growth was supported by a 3.8% increase in labour income, a 5.8% rise in corporate profits, and a 7.6% gain in unincorporated business income. Early indicators for 2026 suggested a mixed picture, with strong retail sales tempered by significant job losses and slower housing activity. The first quarter of 2026 saw employment decrease by 52,900 jobs, the steepest quarterly loss since early 2009 excluding the pandemic period. Job losses were concentrated in the private sector, which shed 70,400 positions, and across major industries including manufacturing and professional services.
Key Economic Challenges and Headwinds
Ontario's economy faces several structural and cyclical challenges. The province's unemployment rate of 7.4% in 2026 ranked 10th out of 13 provinces and territories, remaining above the national average. Real per-capita GDP growth in Ontario averaged just 0.55% annually from 2000 to 2023, lagging behind the 0.91% average for the rest of Canada. This long-term stagnation in productivity and output per person has contributed to a widening wealth gap compared to many United States jurisdictions. The province is particularly exposed to international trade tensions due to its heavy reliance on the U.S. market and large automotive and steel industries. Other significant pressures include weak homebuilding activity and a population that began to decline, which downwardly pressures the labour force. Heavily indebted consumers are working through mortgage renewals at higher interest rates, constraining household spending. From the third quarter of 2024 to the first quarter of 2026, sectors heavily exposed to U.S. trade, such as manufacturing, wholesale trade, and transportation, saw their output decline by about 1%. Despite these challenges, the province maintained the lowest provincial inflation rate in Canada at 2.0% on a year-to-date basis in 2026, compared to 2.6% nationwide, which provided some relief for real wages. This lower inflation stemmed from declining rents, soft home price inflation, and discounting in areas like internet services and household furnishings.
Sectoral Analysis and Employment Trends
The distribution of economic activity across sectors reveals both strengths and vulnerabilities. The three sectors contributing the most to Ontario's GDP in 2026 were Real Estate & Rental & Leasing, Finance & Insurance, and Manufacturing, representing a combined 32.8% of provincial output. In terms of job creation, the landscape is different. The Retail Trade sector employed 872,623 people in 2026, while Manufacturing employed 616,747, and Accommodation & Food Services employed 610,565. Employment in Ontario grew at an annualized rate of 3.2% over the five years to 2026, outperforming the national average of 1.6%. Recent employment trends have been volatile. The first quarter of 2026 saw major job losses in specific industries. The manufacturing sector lost 31,100 jobs, professional and technical services lost 16,400, and wholesale and retail trade lost 13,300 positions. These losses were partially offset by gains in sectors like business support services, which added 11,500 jobs, health care and social assistance which added 3,700, and public administration which added 3,100. The labour force itself contracted sharply by 71,300 in early 2026, the largest decline on record excluding the pandemic, as people exited the job market. All major age groups saw job losses, with youth employment decreasing by 33,400 jobs. This complex employment picture underscores the shifting nature of Ontario's economic base.
Green Shoots and Potential Strengths
Despite significant headwinds, several positive indicators suggest areas of potential resilience. Ontario's housing affordability improved from the third quarter of 2023, driven by falling prices, declining interest rates, and rising household incomes. This improvement supported modest momentum in resale housing markets and could contribute positively to future residential investment and GDP growth. Industries outside those heavily exposed to U.S. trade have held up relatively well. From the third quarter of 2024 to the first quarter of 2026, GDP excluding manufacturing, wholesale trade, and transportation was up an annualized 1.3%. Even within the beleaguered manufacturing sector, there are signs of adjustment. In May 2026, nominal manufacturing sales rose to $33 billion, the highest level since 2023, lifted by the transportation sector. The share of nominal shipments to markets outside the U.S. climbed to about 35% in 2026 from roughly 20% in 2024, indicating a diversification of export markets, though much of this stemmed from gold exports benefiting from higher prices. Bank of Canada surveys suggest businesses in trade-exposed industries have been adjusting to the more difficult backdrop, which may mean the worst impacts are in the past.
Comparative Analysis with Other Jurisdictions
When compared internationally, Ontario's economic output per person lags behind most American states. Based on 2024 data adjusted for purchasing power parity, Ontario's GDP per capita was US$65,000. This placed the province 48th out of 60 U.S. states and Canadian provinces, meaning Ontarians are poorer on average than residents of 43 U.S. states, including Louisiana, Nebraska, and Missouri. The wealth gap between Canada and the United States is now larger than at any point since the Second World War. Among Canadian provinces, Ontario's per capita output is higher than Quebec's US$60,100 and Manitoba's US$56,500, but lower than the figures for leading U.S. states like New York at US$116,900, Massachusetts at US$109,100, and Washington at US$107,600. The table below shows the GDP per capita for selected Canadian provinces and U.S. states in 2024, providing a clear comparison of economic output adjusted for cost of living and exchange rates.
| Jurisdiction | GDP Per Capita (2024, PPP USD) | Rank (out of 60) |
|---|---|---|
| New York (State) | $116,900 | 1 |
| British Columbia | $66,400 | 46 |
| Ontario | $65,000 | 48 |
| Quebec | $60,100 | 55 |
| Manitoba | $56,500 | 56 |
| New Brunswick (Province) | Below $56,500 | 60 (last) |
This comparative disadvantage stems from decades of slower productivity growth in Canada relative to the United States. From 1981 to 2024, Canadian productivity increased 61 percent, while U.S. productivity grew approximately 127 percent. In the last decade alone, Canada's productivity grew only 0.3 percent. The last time Canada's productivity slightly outpaced America's was in the early 2000s. This long-term trend has fundamental implications for wages, living standards, and economic competitiveness.
Income, Investment, and Household Economics
The income generated within Ontario's economy is distributed across several categories. In 2025, labour income grew by 3.8%, corporate profits increased by 5.8%, and unincorporated business income rose by 7.6%. All other sources of income grew by 3.2% that year. Trends in disposable income are a key indicator of household financial strength and aggregate demand in the economy. Investment patterns reveal areas of strength and weakness. Non-residential construction investment was $3.2 billion in 2026, ranking Ontario 8th among provinces. For the year 2025, non-residential investment grew by 2.2%, and government capital expenditure saw strong growth of 7.0%. However, these gains were offset by significant declines in other areas. Residential investment fell by 4.1% in 2025, and machinery and equipment investment dropped by 5.8%. Exports also declined by 0.6% that year, reflecting challenges in international trade. These investment figures highlight the shifting priorities and constraints within the provincial economy.
Sources of Economic Data and Measurement
Official data on Ontario's GDP comes from several key government sources. The primary comprehensive assessment is the Ontario Economic Accounts (OEA), produced by the Ontario Ministry of Finance and released approximately four months after each quarter ends. The OEA for the fourth quarter of 2025 was released on April 10, 2026. This report provides detailed data on real and nominal GDP, breaking down contributions from consumption, investment, government spending, and net trade. In addition to the OEA, Statistics Canada produces many monthly economic indicators that offer more timely insights into Ontario's performance. These indicators include employment figures, retail sales, manufacturing sales, and housing starts, typically released one to two months after data collection. Analysts and policymakers use this combination of comprehensive quarterly accounts and higher-frequency monthly data to monitor economic trends. Key concepts include real GDP (adjusted for inflation), nominal GDP (including price changes), and GDP per capita (total output divided by population). Understanding these different measures is essential for accurately interpreting the province's economic health and trajectory. The per capita measure has been subject to debate, especially during periods of high immigration, as it can take time for new residents to fully integrate into the workforce and contribute to productivity.
Frequently asked questions
How has Ontario's GDP grown in recent years?
Ontario's real GDP grew by 1.3% in 2025, but contracted by 0.3% in the fourth quarter of that year. Over the five-year period to 2026, the province's GDP grew by 2.2%. Nominal GDP, which includes price changes, grew by 4.2% in 2025. Growth has been modest and uneven, with particular weakness in residential investment, which fell 4.1% in 2025, and exports, which declined 0.6%.
What is the current employment situation in Ontario?
In 2026, businesses in Ontario employed 5,466,372 people, with an unemployment rate of 7.4%. Employment grew at an annualized rate of 3.2% over the five years to 2026. However, the first quarter of 2026 saw a significant loss of 52,900 jobs, with major declines in manufacturing, professional services, and trade sectors. The labour force contracted by 71,300 that quarter, the sharpest decline on record excluding the pandemic.
What are the main challenges and strengths for Ontario's economy?
Ontario's unemployment remains well above the nation overall. The province is in the crosshairs of tariffs, thanks to a heavy reliance on the U.S. market and Ontario's large steel and automotive industries. Meanwhile, homebuilding is weak and heavily indebted consumers are working through another wave of mortgage renewals at higher interest rates. Ontario has the lowest provincial inflation rate in the country at 2.0 percent, versus 2.6 percent nationwide. Ontario's more subdued inflation rate has translated into rising inflation adjusted wages. The share of nominal shipments to markets outside of the U.S. has climbed to about 35 percent so far in 2026 from roughly 20 percent in 2024, supporting a diversification narrative.
What is Ontario's GDP and its share of Canada's economy?
Ontario's gross domestic product (GDP) was $909.3 billion in 2026. The province generates approximately 38.5% of Canada's total GDP, making it the largest economy in the country. For the year 2025, Ontario's nominal GDP grew by 4.2%, reflecting gains in labour income and corporate profits. Ontario's population was 16,534,547 in 2026, having grown at an annualized rate of 2.2% over the previous five years. The province's real GDP grew by 1.3% in 2025, led by increases in household and government spending.
What are the largest industries in Ontario's economy?
The largest industries by revenue in Ontario are Commercial Banking, New Car Dealers and Gasoline and Petroleum Wholesaling, which generated $210.4 billion, $69.2 billion and $58.6 billion in 2026 respectively. The Real Estate and Rental and Leasing, Finance and Insurance, and Manufacturing sectors contributed the most to provincial GDP, representing a combined 32.8%. The largest employers are the Government of Ontario, Royal Bank of Canada and Td Bank N A, which employed 225,597, 56,260 and 56,050 people in 2026. In 2026, businesses in Ontario employed a total of 5,466,372 people.
How does Ontario's GDP per capita compare to U.S. states?
Ontarians are poorer on average than Americans from 43 states, including Louisiana, according to GDP per capita data. Ontario ranked 48th out of 60 U.S. states and Canadian provinces in 2024. Real per capita GDP growth in Ontario averaged just 0.55% annually from 2000 to 2023, compared to 0.91% in the rest of Canada. Canada's stagnant GDP growth has led to a widening wealth gap with the United States, which is now larger than at any point since the Second World War. This performance places Ontario and Quebec near the bottom of the list, well behind many American states.
Sources and further reading
- Ontario Economic Trends, Stats & Rankings ibisworld.com
- Ontario gross domestic product, Open Government Portal open.canada.ca
- Ontario's Economy: Green Shoots Beneath the Gloom economics.td.com
- Ontario Economic Monitor: October 2025 to March 2026 fao-on.org
- Ontario and Quebec are poorer than Louisiana and 42 ... thehub.ca
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