The Canadian economy recorded a small upward shift at the start of the year, with real gross domestic product inching up 0.1% in January following a revised 0.2% rise in the final month of 2025. The advance was driven primarily by activity in goods-producing sectors, even as a pronounced decline in manufacturing restrained broader momentum.
Goods-producing industries collectively rose 0.2%, led by a rebound in oil and gas extraction. The energy sector itself expanded by 1.2% as crude petroleum output increased in Newfoundland and Labrador and in Saskatchewan. Mining and quarrying and construction also contributed to the goods-side strength.
"The Canadian economy advanced by 0.1% m/m to start the year, a tick above the consensus expectation and the advance estimate," said CIBC economist Katherine Judge.
That positive performance in extraction and construction contrasted with a steep 1.4% contraction in manufacturing. The decline was tied to prolonged holiday-related shutdowns at automotive plants in Ontario. The automotive slowdown had knock-on effects beyond factories, pulling down wholesale trade and machinery production too.
"That was driven by strength in goods-producing sectors, namely oil and gas extraction, mining/quarrying, and construction, which masked a decline in manufacturing," Judge added.
Construction remained one of the brighter areas of the economy, marking its third straight monthly increase with a 1.1% gain. Both residential building and engineering projects reached new peaks during the period, even as activity in the broader real estate market recorded its first monthly decline in ten months.
On the services side, extreme winter weather interrupted transit operations and air travel, applying pressure to activity in affected categories. Despite those seasonal headwinds, preliminary indicators for February point toward a pickup as manufacturing begins to recover from the January lull.
The financial sector also contributed to growth. Foreign demand for Canadian debt supported a strong showing in finance and insurance, which expanded by 0.5% - noted as the industry's most robust performance since late 2025. The increase was linked to record levels of international investment in Canadian bonds during the period.
Looking forward, Statistics Canada's advance estimate suggests GDP rose by 0.2% in February. Summing up the early trajectory for the quarter, Judge observed that this performance "leaves Q1 GDP tracking roughly in line with the Bank of Canada's MPR forecast of just under 2%."
Key sectors highlighted in the January data include energy, manufacturing, construction, finance and insurance, wholesale trade, machinery production, and services such as transit and air transport. The interplay between strong extraction and construction activity and a pronounced dip in auto-related manufacturing shaped the headline outcome for the month.