Canada’s real GDP grew 0.1% in January, which followed 0.2% GDP growth in December.
Those back-to-back gains point to a slightly firmer start to 2026 than many economists expected, as strength in resource and construction activity offset weakness in manufacturing and parts of the services sector.
Goods-producing industries led the way. Output in mining, oil and gas extraction and quarrying rose 1.2% in January, reversing December’s decline. Higher crude oil production in Newfoundland and Labrador and Saskatchewan, along with increased natural gas extraction, powered much of that rebound.
Construction expanded 1.1%, its third straight monthly increase, with both residential and non-residential building advancing. Together, resources and construction provided the bulk of January’s growth.
Manufacturing told a different story. Output fell and more than erased December’s gains, with the pullback concentrated in durable goods. Wholesale trade also declined, driven largely by weaker motor vehicle and parts activity as auto exports dropped during a seasonal slowdown in production. Harsh weather further weighed on transportation and warehousing.
Major service industries – including real estate, health care and finance – were essentially flat, providing little additional support to overall GDP.
Statistics Canada’s advance estimate points to a 0.2% rise in real GDP in February, suggesting the first quarter could come in stronger than earlier, gloomier headlines implied. But the broader backdrop remains fragile: Canada shed 84,000 jobs in February, pushing unemployment to 6.7%, while the national benchmark home price fell 4.8% year over year.
The war in Iran, and the resulting run-up in crude prices, adds another layer of risk. Higher energy prices may bolster parts of Canada’s resource sector, but they also threaten to squeeze households, lift inflation and potentially force the Bank of Canada to keep interest rates higher for longer – just as other parts of the economy show signs of strain.
