Actual GDP rose 0.4% in January, constructing on a 0.3% achieve in December and barely surpassing each Statistics Canada’s flash estimate and economists’ expectations.
The expansion was broad-based, with 13 of 20 industries posting positive aspects. Items-producing sectors led the best way with a 1.1% enhance—their strongest month-to-month efficiency since October 2021—pushed by mining, utilities, manufacturing, and building.
Notable positive aspects got here from mining, quarrying, and oil and fuel extraction (+1.8%), utilities (+2.7%), manufacturing (+0.8%), building (+0.7%), and wholesale commerce (+0.7%), all of which contributed to the robust exhibiting in goods-producing industries.
Retail commerce, which had been the most important progress contributor in December, pulled again in January with a 0.9% decline as half of its subsectors contracted. Service-producing industries edged up simply 0.1% general.
Economists say the financial momentum from late 2024 continued into the brand new 12 months, serving to to carry GDP additional in January.
“The large positive aspects left output 2.2% above year-ago ranges, the quickest tempo in practically two years, and drumming residence the purpose that the Canadian economic system had been turning the nook because of the dramatic drop in rates of interest since final June,” famous BMO’s Douglas Porter.
TD economist Marc Ercolao agreed, saying, “With the knowledge we’ve at hand, Q1-2025 progress is monitoring round 2.0% and in step with the Financial institution of Canada’s January MPR projections.”
Nevertheless, that momentum could also be short-lived.
Tariffs threaten to stall momentum
StatCan’s flash estimate for February exhibits no progress, with actual GDP by trade “primarily unchanged.” The official information will likely be launched April 30.
Regardless of the robust begin to the 12 months, economists agree with StatCan that progress might flatline in February.
“Previous this, the outlook is turbulent,” Ercolao says. “There are clear draw back dangers to Canada’s economic system, particularly as the specter of widespread tariffs appears imminent come April 2.”
BMO’s Porter provides an identical take, noting that January’s progress was fuelled by earlier charge cuts—a lift that’s possible nearing its finish.
“…with the commerce conflict whipping onto the scene firstly of February, sentiment chilled abruptly, as did exercise seemingly,” he notes. “We’re bracing for one thing a lot more durable in coming months as client and enterprise confidence has been hit extraordinarily laborious by the deep commerce uncertainty.”
The rising uncertainty is making the Financial institution of Canada‘s subsequent transfer more and more tough to foretell, particularly with new tariffs on the horizon.
Porter says the Financial institution is prone to maintain regular for now, except there’s a “materials deterioration within the outlook following subsequent week’s so-called reciprocal tariff bulletins.”
Ercolao provides a barely totally different take, anticipating the Financial institution to ship two 25-bps charge cuts within the coming conferences to cushion the economic system forward of a possible commerce battle. However like Porter, he notes that outlook hinges on how the tariff state of affairs unfolds.
“That would change if the U.S. administration reverses course on their tariff plans,” he says, “however it’s one thing that seems unlikely at this level.”
For the newest rate of interest forecasts from Canada’s main banks, go to CMT’s Financial institution of Canada charge forecasts web page.
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Financial institution of Canada brett Surbey douglas porter financial information financial indicators Editor’s decide gdp gdp progress Marc Ercolao tariffs
Final modified: March 28, 2025
