Canada GDP edges up 0.1% in January as services stall

Canada's economy posted a modest gain in January, with gross domestic product rising 0.1% from December, Statistics Canada said.

The increase followed a 0.2% rise in the previous month and came in ahead of analyst expectations for flat growth.

An advance estimate pointed to a 0.2% expansion in February, though the agency cautioned that early readings are typically subject to revision.

Goods industries lift output as manufacturing falls

Output from goods-producing industries, which account for roughly one-quarter of the economy, grew 0.2% in January, matching the pace set in December.

Mining, quarrying, and oil and gas extraction, along with construction, were the principal drivers of growth. Construction expanded for a third consecutive month.

Manufacturing, the second-largest contributor to monthly GDP, fell 1.4%, reversing gains recorded in December.

Services stall as real estate, transport contract

Growth in services industries was flat in January, underscoring a fragile start to the year.

Wholesale trade, transportation, and real estate all contracted, offsetting gains in retail trade, finance and insurance, and educational services. Nine of the 20 industrial sectors recorded growth during the month.

Outlook and policy implications

The economy has struggled in the wake of tariffs imposed by US President Donald Trump on sectors including steel, automotive, aluminium, lumber, and copper products, weighing on manufacturing output.

Exemptions under the US-Mexico-Canada free trade agreement have supported other areas, but overall growth has remained subdued and the economy contracted in the fourth quarter.

Economists warn that growth could face a larger setback in the coming months as elevated crude oil prices — driven by the war in Iran — weigh on consumer spending and push inflation higher.

That dynamic could also pressure the Bank of Canada to raise interest rates despite broader economic weakness.

January's modest uptick and the tentative February reading point to a cautious start to the year, with goods industries carrying the bulk of momentum while services stall.

How energy prices and trade conditions evolve will largely determine whether that early footing holds.