Canada’s economy experienced a modest increase in January, with growth driven by gains in goods-producing sectors despite a slowdown in manufacturing activities, 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 January was primarily fueled by the mining, oil, and gas extraction industries, which expanded by 1.2%, reversing the declines seen in December. Increased crude petroleum extraction in Newfoundland and Labrador and Saskatchewan, along with the expansion of natural gas extraction, contributed to the growth in the oil and gas sector.
Additionally, the construction sector saw a 1.1% growth in January, marking the third consecutive month of expansion, driven by growth in both residential and non-residential building construction activities.
Douglas Porter, the chief economist at the Bank of Montreal, described the report as a “pleasant surprise,” noting that despite challenges such as harsh winter weather and weak manufacturing and employment data at the start of the year, the Canadian economy showed resilience in the first two months of 2026.
However, the manufacturing sector experienced a decline in January, offsetting some of the growth observed in December, particularly in the durable goods subsector. Wholesale trade also decreased, primarily driven by lower exports of motor vehicles and parts due to a seasonal dip in auto production. Adverse weather conditions affected 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 change during the month. Statistics Canada’s preliminary estimate for February suggests a 0.2% increase in real GDP, but this figure is subject to revision.
Despite potential challenges ahead, including the impact of elevated crude oil prices due to geopolitical tensions and their effects on consumer spending and inflation, the positive performance in January and the advance estimate for February set an optimistic tone for the first quarter of the year, according to Porter.
Economists have cautioned that future growth may be dampened as high oil prices could lead to reduced consumer spending and increased inflation, potentially prompting the Bank of Canada to consider raising interest rates amid economic fragility.