Canadian real GDP grew by 0.1 per cent in January after increasing by 0.2 per cent in December. Goods-producing sectors rose by 0.2 per cent, while service-producing industries were largely unchanged from the previous month. Detractors from growth were led by manufacturing (-1.4 per cent), and wholesale trade (-1.2 per cent). Conversely, mining, quarrying, and oil and gas extraction (1.2 per cent), construction (1.1 per cent), and retail trade (0.8 per cent) drove January’s growth. Output for the offices of real-estate agents and brokers fell by 6.1 per cent month-over-month. Preliminary estimates suggest that real GDP by industry increased by 0.2 per cent in February. 

January's GDP data, accompanied by a strong flash estimate for February, is a pleasant surprise after the Canadian economy lost over 100,000 jobs in the first two months of the year. However, this report reflects conditions prior to the Iran conflict, which lies at the heart of the Bank of Canada’s next meeting decision. Looking ahead, the Bank’s forward guidance during its next rate announcement will dictate the likely trajectory of monetary policy amidst the Middle Eastern conflict. Nonetheless, we tentatively expect a fourth consecutive rate hold as the Bank continues evaluating the length and depth of the global oil price shock, which remains highly uncertain.