Canada’s economy experienced a slight upturn in January, with growth driven by the goods-producing sectors while manufacturing slowed down, according to Statistics Canada. The country’s GDP increased by 0.1% during the month, surpassing analysts’ expectations following a 0.2% growth in December.
The growth in January was largely propelled by mining, oil and gas extraction, and quarrying, which expanded by 1.2%, reversing the declines seen in December. The rise in oil and gas extraction was primarily due to increased crude petroleum extraction in Newfoundland and Labrador and Saskatchewan, along with an expansion in natural gas extraction.
The construction sector also saw growth of 1.1% in January, marking the third consecutive month of expansion, with increases 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 economy showed resilience in the first two months of the year despite adverse winter conditions and weak manufacturing and employment reports earlier in 2026.
However, manufacturing saw a decline in January, offsetting some of the growth from December, particularly in the durable goods subsector. Wholesale trade also decreased, mainly in motor vehicles and their parts, as exports of passenger cars and light trucks dropped due to a seasonal downturn in auto production. Adverse weather conditions impacted the transportation and warehousing sectors.
While services-producing industries like real estate, health care, and finance, which are significant contributors to the Canadian economy, remained relatively stable in January, the data agency’s advance estimate for February predicts a 0.2% increase in real GDP, subject to revisions.
The positive performance in January and the projected growth in February create a more optimistic outlook for the first quarter than initially anticipated, as highlighted by Porter. Economists, however, warn that future growth may be impacted by high crude oil prices resulting from the conflict in Iran, potentially dampening consumer spending and driving inflation higher. This situation could potentially prompt the Bank of Canada to raise interest rates during a period of economic fragility.
