Canada’s economy experienced a modest expansion in January, driven by growth in goods-producing sectors while witnessing a slowdown in manufacturing, according to Statistics Canada. The Gross Domestic Product (GDP) increased by 0.1 per cent during the month, surpassing analysts’ projections following a 0.2 per cent growth in December.
The mining, oil, and gas extraction industries played a significant role in the monthly expansion, with a 1.2 per cent increase that reversed the declines observed in December. The growth in oil and gas was primarily attributed to heightened crude petroleum extraction in Newfoundland and Labrador, as well as Saskatchewan, with a concurrent expansion in natural gas extraction.
In the construction sector, there was a 1.1 per cent growth in January, marking the third consecutive month of expansion, driven by increased activity in both residential and non-residential building construction.
Douglas Porter, the chief economist at the Bank of Montreal, expressed positivity towards the report, labeling it a “pleasant surprise.” Despite challenges such as severe winter conditions and weak manufacturing and employment data early in 2026, the Canadian real GDP exhibited resilience in the initial months of the year, according to Porter.
However, the manufacturing sector witnessed a decline in January, offsetting some of the growth observed in December, particularly affected by weaknesses in the durable goods subsector. Wholesale trade also contracted, mainly driven by reductions in motor vehicle exports due to a seasonal decline in auto production. Adverse weather conditions impacted the transportation and warehousing sectors.
Key service industries like real estate, health care, and finance, which are vital contributors to the Canadian economy, remained relatively stable during the month. The advance estimate by the data agency for February suggests a 0.2 per cent increase in real GDP, subject to revisions.
Porter highlighted that both January’s performance and the anticipated growth in February set a more positive tone for the first quarter than initially anticipated. Economists cautioned that future growth may face challenges due to the impact of elevated crude oil prices resulting from the conflict in Iran, which could dampen consumer spending and fuel inflation, potentially prompting the Bank of Canada to raise interest rates amidst economic fragility.
