Canada’s economy experienced a slight uptick in January, with growth driven by gains in goods-producing sectors, according to Statistics Canada. The Gross Domestic Product (GDP) expanded by 0.1%, surpassing analysts’ predictions following a 0.2% growth in December.
Notably, the mining, oil, and gas extraction industries played a significant role in the monthly growth, posting a 1.2% expansion and reversing the declines seen in December. The growth in the oil and gas sector was fueled by increased extraction of crude petroleum in Newfoundland and Labrador, as well as Saskatchewan, with a rise in natural gas extraction as well.
Furthermore, the construction sector saw a 1.1% growth in January, marking the third consecutive month of expansion, driven by increased activities 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 severe winter weather and weak manufacturing and employment data early in the year, the Canadian real GDP performed better than anticipated in the first two months of 2026.
However, there were declines in manufacturing in January, particularly in the durable goods subsector, offsetting some of the gains from December. Wholesale trade also dipped, primarily due to reduced exports of motor vehicles and parts, influenced by a seasonal decline in auto production. Adverse weather conditions affected the transportation and warehousing sectors.
On the other hand, services-producing industries such as real estate, health care, and finance, which are significant contributors to the Canadian economy, experienced minimal changes during the month. The advance estimate for February suggests a 0.2% increase in real GDP, though this figure is subject to revisions.
Despite potential challenges ahead, including the impact of high crude oil prices resulting from the conflict in Iran on consumer spending and inflation, the optimistic performance in January and February sets a positive tone for the first quarter of the year, as per Porter’s analysis. There are concerns that economic growth may be further impacted in the upcoming months, potentially leading the Bank of Canada to consider raising interest rates amid economic vulnerabilities.