The Canadian federal government's contribution to economic activity is contracting at the steepest annual rate in three decades, according to new data from Statistics Canada.
The sharp reduction in the public sector's economic footprint coincides with a broader rebound in April GDP, which showed healthy growth after months of sluggish performance.
The divergence highlights a structural shift in the Canadian economy.
While the overall economy is stabilizing, the federal government is actively reducing its size.
This contraction is a direct result of policy measures outlined in last year's federal budget, which committed to shrinking the public service while simultaneously increasing defence expenditure.
The data underscores the tension between fiscal consolidation and strategic investment.