Canada’s economy experienced slight growth in January, with an increase of 0.1 per cent in GDP driven by gains in goods-producing sectors, according to Statistics Canada. This exceeded analysts’ predictions following a 0.2 per cent growth in December. Mining, oil and gas extraction, and quarrying significantly contributed to the monthly expansion, rising by 1.2 per cent and reversing the declines from the previous month.
The growth in the oil and gas sector was primarily attributed to increased crude petroleum extraction in Newfoundland and Labrador, as well as Saskatchewan, with a corresponding expansion in natural gas extraction. The construction industry also saw a positive trend, growing by 1.1 per cent in January for the third consecutive month, fueled by growth in both residential and non-residential building construction.
Douglas Porter, the chief economist at the Bank of Montreal, described the report as a “pleasant surprise,” noting that the Canadian real GDP performed better than expected in the first two months of the year. Despite challenges such as harsh winter conditions and weak results in manufacturing and employment early in 2026, the economy showed resilience. Porter acknowledged that the positive performance occurred before the Iran conflict and subsequent fuel price spikes, indicating a stronger economic position than anticipated.
However, the manufacturing sector experienced a decline in January, offsetting some of the gains from December, particularly due to weaknesses in the durable goods subsector. Wholesale trade also decreased, primarily in motor vehicles and related parts, as exports of passenger cars and light trucks declined due to a seasonal slowdown in auto production. Adverse weather conditions impacted the transportation and warehousing sectors.
Key services-producing industries like real estate, health care, and finance, which are significant contributors to the Canadian economy, showed minimal change during the month. The advance estimate for February suggests a 0.2 per cent increase in real GDP, though this figure is subject to revision.
Both the January figures and the preliminary estimate for February indicate a more positive start to the first quarter than initially projected, according to Porter. Economists caution that future growth may be dampened by the effects of elevated crude oil prices resulting from the Iran conflict, which could lead to reduced consumer spending and heightened inflation. This situation may prompt the Bank of Canada to consider raising interest rates during a period of economic fragility.