Canada’s economy experienced incremental growth in January, with an uptick in goods-producing sectors offsetting a slowdown in manufacturing, according to Statistics Canada. The Gross Domestic Product (GDP) increased by a modest 0.1% during the month, surpassing analysts’ predictions following a 0.2% growth in December.
The growth was primarily driven by the mining, oil, and gas extraction sectors, which expanded by 1.2% in January, reversing the declines seen in December. Increased crude petroleum extraction in Newfoundland and Labrador and Saskatchewan, along with growth in natural gas extraction, fueled the expansion.
Furthermore, the construction industry saw a 1.1% growth in January, marking the third consecutive month of expansion, driven by both residential and non-residential building construction activities.
Douglas Porter, the chief economist at the Bank of Montreal, described the report as a “positive surprise,” noting that the Canadian real GDP performed better than expected in the early months of the year despite challenges such as severe winter conditions and weak manufacturing and employment data at the beginning of 2026.
However, the report highlighted a decline in the manufacturing sector in January, overshadowing the gains from December, particularly due to weakness in the durable goods subsector. Wholesale trade also decreased, mainly attributed to declines in motor vehicles and parts sales, with a seasonal drop in auto production impacting exports of passenger cars and light trucks. Adverse weather conditions affected the transportation and warehousing industries.
While service-producing sectors like real estate, healthcare, and finance, which are significant contributors to the Canadian economy, saw minimal changes in January, the advance estimate for February suggests a 0.2% increase in real GDP, subject to revisions.
Looking ahead, economists anticipate potential economic challenges in the upcoming months due to the impact of elevated crude oil prices amid the conflict in Iran, which could dampen consumer spending and drive inflation higher. This situation might prompt the Bank of Canada to consider raising interest rates during a period of economic fragility, as per analysts.