Canada’s economy experienced modest growth in January, with a 0.1% increase in GDP driven by gains in the goods-producing sectors, according to Statistics Canada. This growth surpassed expectations following a 0.2% expansion in December. Notably, mining, oil and gas extraction, and quarrying industries played a significant role in the monthly growth, expanding by 1.2% and reversing the declines seen in December.
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 natural gas extraction also expanding. Additionally, the construction sector grew by 1.1% in January, marking the third consecutive month of growth, driven by expansions 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.” He noted that despite challenges such as a harsh winter and weak manufacturing and employment data at the start of 2026, the Canadian real GDP showed resilience in the first two months of the year.
However, manufacturing experienced a decline in January, offsetting some of the gains from December, particularly in the durable goods subsector. Wholesale trade also decreased, mainly due to lower exports of motor vehicles and parts, influenced by a seasonal decline in auto production. Weather conditions negatively impacted the transportation and warehousing sectors.
Services-producing industries like real estate, health care, 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, though this figure is subject to revisions.
While the January figures and the preliminary estimate for February set a positive tone for the first quarter, economists warn of potential challenges ahead. The impact of elevated crude oil prices resulting from the conflict in Iran could dampen consumer spending and drive inflation higher, possibly prompting the Bank of Canada to raise interest rates amid economic vulnerabilities.