Canada’s economy experienced a slight uptick in January, driven by growth in goods-producing sectors that offset a slowdown in manufacturing, according to data from Statistics Canada released on Tuesday. The country’s GDP expanded by 0.1% during the month, surpassing predictions and following a 0.2% growth in December.
Key contributors to the growth were the mining, oil, and gas extraction industries, which expanded by 1.2% in January, reversing the declines seen in the previous month. The increase in oil and gas production was primarily driven by heightened crude petroleum extraction in Newfoundland and Labrador, as well as Saskatchewan, with a boost in natural gas extraction as well.
Furthermore, the construction sector saw a 1.1% growth in January, marking the third consecutive month of expansion, fueled by increases in both residential and non-residential building construction activities.
Douglas Porter, the chief economist at the Bank of Montreal, described the report as a “welcome surprise,” noting that the Canadian real GDP performed better than anticipated 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, the economy showed resilience.
However, the report also highlighted a decline in manufacturing in January, particularly in the durable goods subsector, offsetting some of the gains from December. Wholesale trade, especially in motor vehicles and their parts, saw a decline as exports of passenger cars and light trucks decreased due to a seasonal reduction in auto production. Adverse weather conditions affected the transportation and warehousing sectors.
Meanwhile, services-producing industries like real estate, health care, and finance, which are significant contributors to the Canadian economy, remained relatively stable in January. The advance estimate for February suggests a 0.2% increase in real GDP, although this figure is subject to revision.
Despite potential challenges ahead, including the impact of high crude oil prices resulting from the conflict in Iran on consumer spending and inflation, the positive performance in January and the projected growth for February set an optimistic tone for the first quarter of the year, according to Porter. Economists caution that growth may face further pressures in the coming months, potentially leading to the Bank of Canada considering interest rate hikes amidst economic vulnerabilities.
