Real gross domestic product (GDP) edged up 0.1% in January, following 0.2% growth in December, driven by strength in goods-producing industries, reported Statistics Canada on Tuesday.
The federal agency said the retail trade sector expanded 0.8% as six of its nine subsectors were up in January.
“General merchandise retailers (+3.0%) led the growth in January. Motor vehicle and parts dealers (+2.4%) was another large contributor to the increase, reflecting higher retailing activity at new car dealers,” said Statistics Canada.
In January, goods-producing industries expanded by 0.2% for the second month in a row, as gains in mining, quarrying, and oil and gas extraction, construction and utilities more than offset a contraction in manufacturing. Meanwhile, services-producing industries were essentially unchanged in January, as increases in retail trade and finance and insurance were offset by declines in wholesale trade and transportation and warehousing. Overall, nine of the 20 industrial sectors recorded growth in January, explained Statistics Canada.
Advance information indicates that real GDP increased 0.2% in February, said the report.
The Canadian economy is holding up better than expected amid ongoing uncertainty and external pressures, but is falling short of its potential, said CPA Canada’s chief economist.
Following a disappointing negative fourth quarter, early 2026 GDP data points to modest but positive growth, with consumption proving surprisingly strong even as tariffs and population pressures weigh on key sectors.
“Stronger consumer activity—supported by wage gains and financial market performance—is helping offset ongoing pressures from U.S. tariffs and demographic challenges,” said David-Alexandre Brassard. “But this resilience shouldn’t be overstated as growth remains modest and uneven with key sectors still under strain.”
Manufacturing and wholesale trade continue to feel the effects of tariffs, both hovering near their lowest levels in real terms over the past year. At the same time, public sector spending and a rebound in natural resources are helping support overall growth.“The struggles of the labour market in early 2026 are not yet echoed by the overall economy,” says Brassard. “Public sector support and a pickup in natural resources are helping sustain momentum, even as trade-sensitive industries remain under pressure.”
Katherine Judge, Senior Economist, CIBC Capital Markets, said: “The Canadian economy advanced by 0.1% m/m to start the year, a tick above the consensus expectation and the advance estimate. That was driven by strength in goods-producing sectors, namely oil and gas extraction, mining/quarrying, and construction, which masked a decline in manufacturing. The strength in goods sectors offset weakness tied to extreme weather conditions that weighed on transportation/warehousing and real estate activity. Momentum increased in February, as the advance estimate pointed to a 0.2% m/m gain, which leaves Q1 GDP tracking roughly in line with the Bank of Canada’s MPR (Monetary Policy Report) forecast of just under 2%.”
“Canadian consumers are becoming far more deliberate about how they spend. While overall GDP growth was just 0.1% in January, retail rose 0.8%, showing that demand is still there, but increasingly selective,” said For Canada, that raises the stakes. Growth is becoming more reliant on a consumer that is still spending, but increasingly difficult to read. Retailers that can respond in real time will be best positioned to capture that demand as uncertainty continues,” said Vinayak Madappa, Retail Advisory Partner, Capgemini.
“Consumers are consolidating purchases with shifting behaviors to discount brands and big box hyper markets and timing big-ticket buys more carefully, which is making demand more volatile and harder to predict. At the same time, geopolitical instability, weaker manufacturing and wholesale activity is tightening supply chains and increasing the risk of demand and inventory falling out of sync.
“For Canada, that raises the stakes. Growth is becoming more reliant on a consumer that is still spending, but increasingly difficult to read. Retailers that can respond in real time will be best positioned to capture that demand as uncertainty continues.”
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