Canada’s economy experienced slight growth in January, with gains in goods-producing sectors counterbalancing a slowdown in manufacturing, according to Statistics Canada. The Gross Domestic Product (GDP) increased by 0.1% in January, surpassing analysts’ predictions following a 0.2% growth in December.
The growth was primarily driven by the mining, oil, and gas extraction industries, which expanded by 1.2% and reversed the declines seen in December. Increased crude petroleum extraction in Newfoundland and Labrador and Saskatchewan, along with growth in natural gas extraction, contributed to the overall growth.
The construction sector also saw growth, increasing by 1.1% in January for the third consecutive month. Both residential and non-residential building construction expanded during this period.
Douglas Porter, the chief economist at the Bank of Montreal, described the report as a “pleasant surprise.” He noted that the Canadian real GDP performed better than expected in the first two months of the year, despite challenges such as harsh winter conditions and weak results in manufacturing and employment earlier in 2026.
While the economy showed resilience before the conflict in Iran and subsequent fuel price spikes, economists anticipate potential challenges ahead. Manufacturing declined in January, particularly in the durable goods subsector, offsetting some of the gains from December. Wholesale trade also decreased, driven by lower exports of motor vehicles and parts due to seasonal factors affecting auto production. Adverse weather conditions impacted the transportation and warehousing sectors.
Services-producing industries like real estate, health care, and finance, which are significant contributors to the Canadian economy, experienced minimal change in January. The advance estimate for February suggests a 0.2% increase in real GDP, with the figure subject to revisions.
Despite concerns about the impact of high crude oil prices from the conflict in Iran on consumer spending and inflation, January’s figures and the preliminary estimate for February have set a positive tone for the first quarter, according to Porter. Economists warn that future growth may be hindered by these factors, potentially leading the Bank of Canada to raise interest rates amidst economic fragility.