“Fireworks” in Canada’s economy as GDP rises 2.3 per cent in January

Canada’s economy grew at an annualized rate of 2.3 per cent in January, reports Statistics Canada, with widespread growth reported in both goods and service-producing industries. The actual increase was 0.6 per cent. It was the strongest growth in nearly six years, led by the manufacturing sector, where GDP expanded 1.9 per cent in January. Except for October, every month since June 2016 has seen growth in manufacturing.

The manufacture of durable goods rose 2 per cent in January, led by fabricated metal, non-metallic mineral and wood product manufacturing. With the exception of miscellaneous manufacturing, all durable manufacturing subsectors rose. Transportation equipment was up 0.6 per cent. Growth in motor vehicle, motor vehicle body and trailer, aerospace product and parts and railroad rolling stock manufacturing was partly offset by declines in manufacturing of motor vehicle parts and other transportation equipment.

Non-durable manufacturing rose 1.8 per cent, with growth in every subsector except paper manufacturing. Food manufacturing (up 2.1 per cent) was the major contributor to growth. There were also notable increases in beverage and tobacco product, plastic and rubber product and chemical manufacturing.

GDP growth. Source: Statistics Canada

 

Mining, quarrying, and oil and gas extraction expands expanded 1.9 per cent after contracting 0.5 per cent in December. Oil and gas extraction was up 2 per cent, with increases in both conventional oil and gas extraction and non-conventional oil extraction.

Mining and quarrying excluding oil and gas extraction was up for the fourth month in a row, rising 1.1 per cent. Metal ore mining gained 4.4 per cent, as iron ore mining, copper, nickel, lead and zinc ore mining and gold and silver ore mining expanded, in part from higher exports. Partially offsetting this growth were declines in non-metallic minerals mining (-3.2 per cent) from lower potash extraction and coal mining (-2.8 per cent). Support activities for mining and oil and gas extraction were up 2.7 per cent from increased drilling activity.

Wholesale trade grew 2.4 per cent, the largest monthly gain since July 2013. Growth in this sector was the largest contribution to the increase in service-producing industries, led by a 14 per cent gain at motor vehicle and parts wholesalers on higher exports and imports.

Car parts led the wholesale trade gains in January with a 14 per cent gain in sales.

Farm products wholesalers’ output increased on the strength of oilseed and grain dealers, while wholesalers of personal and household goods, machinery, equipment and supplies, and food, beverage and tobacco also made large contributions to the sector’s growth.

Retail trade grew 1.5 per cent in January, the sixth increase in seven months, with 10 of the 12 subsectors advancing. Motor vehicle and parts dealers rose 1.2 per cent, primarily on the strength of more activity at new car dealers. The largest decline in terms of output was a 3.3 per cent contraction at gasoline stations.

Transportation and warehousing grew 0.8 per cent, led by rail transportation (+5 per cent) as movement of intermodal freight, grain and fertilizer and automotive products increased. Pipeline transportation was up 1.9 per cent, as movement of both natural gas and crude oil increased. Air and truck transportation posted gains, while the output of postal service and couriers and messengers and warehousing and storage declined.

Rail transportation was up 5 per cent in January, with greater movement of freight, grain and fertilizer.

The construction sector expanded 0.4 per cent in January, with residential construction (+0.5 per cent) up for a third consecutive month on increased alterations and improvements and a rise in apartment construction. Repair construction and engineering and other construction activities rose while non-residential construction declined as industrial, public and commercial construction contracted.

Real estate and rental and leasing activity edged up 0.1 per cent, though the output of real estate agents and brokers declined 1.8 per cent as home resale market activity was down.

The finance and insurance sector was unchanged as growth in banking and other depository intermediaries was offset by a decline in financial investment services. Activity at insurance carriers was essentially unchanged.

Accommodation and food services grew 0.9 per cent as both accommodation services and food services and drinking places registered increases.

The utilities sector contracted 1.3 per cent in January. The output of electric power generation, transmission and distribution and natural gas distribution declined as weather conditions were unseasonably mild across Canada, reducing demand for heating.

Agriculture, forestry, fishing and hunting was down for the third time in four months, declining 0.9 per cent in January.

As a result of the strong performance, BMO economist Doug Porter has revised his estimates for first-quarter growth up from 2.7 per cent to 3.5 per cent, calling the January numbers “rip-roaring.” Canada could outpace the US in 2017, he added. CIBC economist Avery Shenfield called the GDP data “fireworks.”

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