OTTAWA, Ont. — The Canadian economy, despite increased expectations, remains stuck in neutral.

The gross domestic product (GDP) remained unchanged in February after a decline of 0.2% in January, Statistics Canada revealed today. Decreased truck and rail transportation is part of the reason.

After registering a strong fourth quarter in 2003, transportation output eased back in 2004. It declined 0.8% in February after a drop of 0.4% in January. A strike in rail transportation, starting February 20, as well as a weaker manufacturing sector coupled with higher insurance costs resulted in decreased activity for both rail and truck transportation. Air transportation eased back for a second consecutive month after showing some signs of a pickup in the latter part of 2003.

Canadian industrial production declined 0.3% as utilities output returned to more normal levels. Industrial production in the US showed a similar decline, also driven by lower output of utilities. Manufacturing output grew marginally, while mining gained ground. Retail trade output advanced 2.3% in February.

Manufacturing production stayed virtually unchanged in February, increasing 0.1%. Strong increases were registered in fabricated metal products and machinery, mainly for aerospace production. Robust US demand for these items pushed up exports of metal fabricated products and machinery. This growth was almost entirely offset by a sharp decline in tobacco products, caused by upcoming closures and already high inventory levels. Clothing manufacturers experienced difficulties in February, as both domestic and international demand were weak

Both residential and non-residential construction declined for the third consecutive month in February.