Canadian economy grew 0.3 per cent in January, beats expectations

Economists on average had expected no growth for the month, according to Thomson Reuters Eikon

The Canadian economy returned to growth to start the year after contracting in November and December as broad-based growth led by the manufacturing and construction industries offset weakness in the resource sector.

Statistics Canada said Friday real gross domestic product grew 0.3 per cent in January.

Economists on average had expected no growth for the month, according to Thomson Reuters Eikon.

“There are no two ways about this one, as it was quite simply above everyone’s expectations,” said Doug Porter, chief economist at the Bank of Montreal.

“This nice gain augurs very well, given that Alberta’s oil production cuts were viewed as the biggest drag on the economy at the start of the year, and growth sailed right through that headwind.”

The growth came as 18 of 20 industrial sectors moved higher.

Goods-producing industries increased 0.6 per cent, led by growth in manufacturing and construction. The manufacturing sector rose 1.5 per cent in January, while the construction sector grew 1.9 per cent, its best showing since July 2013.

Services-producing industries rose 0.2 per cent as all but one sector increased.

READ MORE: World economy forecast to slow in 2019 amid trade tensions

The better-than-expected result for January came after the economy ended 2018 on a weak note.

Growth in the fourth quarter of 2018 came in at an annualized pace of 0.4 per cent, its worst showing in two and a half years.

The weakness prompted economists to raise concerns about the strength of economic growth this year, while the possibility the Bank of Canada may even look to cut interest rates this year was also raised.

The Bank of Canada kept its key interest rate on hold in its rate announcement earlier this month, but did warn Canadians on of a weaker economic performance in the months ahead.

Weakness in the report Friday could be found in the mining, quarrying and oil and gas extraction sector that pulled back 3.1 per cent.

Oil and gas extraction fell 2.6 per cent, due in part to Alberta’s imposition of oil production cuts that began at the start of the year.

Mining, excluding oil and gas, fell 4.0 per cent.

CIBC chief economist Avery Shenfeld said Friday he’s expecting a more modest gain in February, but noted his bank is raising its first-quarter GDP forecast to 1.3 per cent from 0.5 per cent.

“If that’s on the mark, it’s not slow enough to prompt a Bank of Canada rate cut, but neither is it quick enough to justify a further monetary tightening,” he said.

“Markets had been piling on bets that the Bank of Canada would be pushed into an ease, and today’s data were seen as making that less likely.”

Craig Wong, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Pilot project thins out overgrown forest location

Immediate and long term logging and environmental benefits eyed

Gitga’at and LNG Canada announce new Marine Emergency Response and Research Facility in Hartley Bay

LNG Canada providing financial support as committed in 2014 Impact Mitigation and Benefit Agreement

Chevron’s move to exit Kitimat LNG project a dash of ‘cold water’ for gas industry

Canada Energy Regulator approved a 40-year licence to export natural gas for Kitimat LNG

Snowfall warning continues for parts of B.C.’s Interior

First significant snowfall of the season prompts Environment Canada warning

VIDEO: Success of wildlife corridors in Banff National Park has advocates wanting more

Demand for more highway protection escalated after seven elk were killed by a semi-trailer near Canmore

Sharks beat Canucks 4-2 to snap 6-game skid

Vancouver visits Vegas on Sunday

Fans sing Canadian anthem after sound system breaks at BMW IBSF World Cup

The Canadians in attendance made sure their team and flag were honoured on the podium

VIDEO: Fire destroys Big White Ski Resort chalet

Social media eulogies peg the property, nicknamed “The Pharamacy,” as both loved and hated

Prince George RCMP use bait packages to catch porch pirates over the holidays

First-in-Canada program with Amazon looks to combat parcel theft

Nanaimo mechanical engineer creates thief tracking program

Nanaimo Thief Tracking lets users plot and share information about thefts online

Mayor wants B.C. to institutionalize severely mental ill people who are homeless

Those suffering from mental health conditions, such as schizophrenia, need specialized care, mayor says

Five things of note from Trudeau’s mandate letters to his ministers

Some marching orders come from the Liberal Party’s campaign, while others are new additions

Most Read