Canada’s economy bounces back in January

Turnaround in January followed slowdown in the fourth quarter of 2018. Photo: Carol VanHook/Flickr

Canada’s economy grew by 0.3 percent in January, showing surprising strength after a slowdown at the end of 2018.

Growth from the manufacturing (1.5 percent) and construction (1.9 percent) sectors helped drive the increase in the real gross domestic product (GDP), according to figures released today by Statistics Canada.

“Wow, what a great surprise. We were expecting a more muted report,” TD senior economist Brian DePratto wrote in a research note. “There was great breadth, and it was nice to see construction turn in a positive performance after more than half a year in decline.

The data represents a reversal from December when GDP contracted by 0.1 percent, capping a weak quarter. DePratto noted that it would have been Canada’s best January in three years, had it not been for oil-production cuts in Alberta.

In manufacturing, non-durable goods saw the largest increase in seven months, at 1.9 percent, led by food, petroleum and coal products, and chemicals. Durable goods rose by 1.2 percent, led by increases in transportation equipment and electrical equipment.

Wholesale trade increased by 0.8 percent, led by greater demand for building materials, personal and household goods, and machinery equipment and supplies.

Transportation and warehousing, which covers the trucking industry, increased by 0.1 percent.

Retail was relatively flat in January, with increases in clothing, gas stations and building supply shops being offset by declines in auto dealers and parts stores, and general merchandise. It reflected a broader weakness in Canadian consumer confidence.

Mining and oil and gas extraction declined by 3.1 percent – led by a 4.1 percent decline in oil sands, largely because of the Alberta government production cuts.