Canada: Economic activity rebounds in January
Confounding analysts’ expectations, the economy grew 0.3% month-on-month in January, following December’s 0.1% month-on-month contraction. According to Statistics Canada, 18 out of the 20 industrial sectors posted gains over the previous month, as improvements in the construction and manufacturing sectors more than offset a fifth consecutive monthly decline in the mining, quarrying and oil and gas extraction sector.
On an annual basis, growth ticked up to 1.6% in January from 1.1% in the previous month, while annual average growth inched down to 1.9% from 2.0% in December.
Dissecting January’s print, Benoit P. Durocher, a senior economist at Desjardins, noted that:
“Real GDP growth by industry exceeded our expectations for January. The widespread increases in various sectors suggest that Canada’s economy is gaining strength after several difficult months. Some risks remain, however, such as adjustments to domestic demand at higher interest rates, which could further trim production growth in the coming months. The carryover for the first quarter (assuming no changes in real GDP by industry in February and March) is higher than we expected, at close to 1% (annualized). We therefore have to increase our forecast for the first quarter to nearly 1.2%, instead of the 0.5% initially expected.”