Canada’s economy performed better than expected in January, turning out a 0.6 per cent increase in GDP. It was the fourth consecutive monthly increase, and the manufacturing sector was the biggest contributor, Statistics Canada reports. Retail trade, mining, quarrying and oil and gas extraction were also major contributors to the growth.
The growth in manufacturing was an impressive 1.9 per cent in January, following a 1.1 per cent gain in December. Broken down further, durable goods manufacturing was even stronger, rising 2.6 per cent, notably in motor vehicles and parts, metal products and mineral products.
Oil and gas extraction grew for the fourth consecutive month, as did support activities for the mining and oil and gas industries. However, the Bank of Canada cautioned that despite the strong oil output, the energy slowdown is not over; there could be more job losses in the oilpatch, and those losses will continue to drag on the economy.
In other sectors, retail trade expanded 1.5 per cent; utilities were up 2.7 per cent; finance and insurance grew 0.6 per cent; construction grew 0.5 per cent; and the public sector, including education, health and public administration, increased 0.2 per cent.
Economists at Canada’s major banks have called the growth in January “staggering” and “rip-roaring” and “the most encouraging in recent memory.” The vice president of Scotiabank Economics commented that the economy is in “fine shape overall.”
The growth, especially in the manufacturing sector, is what Bank of Canada Governor Steven Poloz has been predicting for months, saying that Canada’s low dollar and the improving economy in the United States would eventually pay off in higher exports of non-resource products.
Economists also see reason for optimism in the stimulus spending coming from the federal government. The combination of massive government spending and the strengthening economic activity across most major sectors is seen as a near-certain indication that the economy will achieve at least 2 per cent GDP growth in 2016.