Canada’s economy experienced a slight uptick in January, with growth driven by gains in goods-producing sectors despite a slowdown in manufacturing, according to Statistics Canada. The Gross Domestic Product (GDP) expanded by 0.1% in January, surpassing analysts’ predictions following a 0.2% growth in December.
The growth in mining, oil and gas extraction, and quarrying played a significant role in the monthly expansion, increasing by 1.2% and reversing the declines observed in December. The rise in oil and gas production was primarily attributed to increased crude petroleum extraction in Newfoundland and Labrador, as well as Saskatchewan, with natural gas extraction also seeing growth.
The construction industry saw a notable 1.1% growth in January, marking the third consecutive month of expansion, driven by increases in both residential and non-residential building construction.
Douglas Porter, the chief economist at the Bank of Montreal, described the report as a positive surprise, noting that the Canadian economy showed resilience in the first months of the year despite challenges such as severe winter weather and weak manufacturing and employment data at the beginning of 2026.
On the other hand, manufacturing experienced a decline in January, offsetting some of the growth seen in December, particularly due to weaknesses in the durable goods subsector. Wholesale trade also decreased, primarily driven by lower exports of motor vehicles and parts, influenced by a seasonal reduction in auto production. Additionally, adverse weather conditions impacted the transportation and warehousing sectors.
Service-producing industries like real estate, health care, and finance, which are significant contributors to the Canadian economy, saw minimal changes during the month. Statistics Canada’s preliminary estimate for February indicates a 0.2% rise in real GDP, subject to potential revisions.
Both the January figures and the early estimate for February have set a more optimistic tone for the first quarter than initially anticipated, according to Porter. Economists caution that future growth may be dampened by the effects of elevated crude oil prices stemming from the conflict in Iran, which could lead to reduced consumer spending and heightened inflation. This scenario might prompt the Bank of Canada to consider raising interest rates amid economic fragility.