Canada's GDP beats expectations, grows 0.6% in January, best month since 2013

Canada's economy expanded for the fourth consecutive month in January, with gross domestic product growing by a more-than-expected 0.6 per cent from the month before.

The figure was twice as much as what economists polled by Bloomberg were expecting and represents the strongest monthly GDP growth since July of 2013.

Goods-producing industries expanded by 1.2 per cent, Statistics Canada reported, far better than the 0.4 per cent growth seen in the service sector.

Oil and gas, manufacturing, retail trade, utilities and finance all expanded. Wholesale trade and the arts, entertainment and recreation sectors shrank.

The mining sector shrank, mainly as a result of a decline in copper, nickel, lead and zinc.

Canada's overall economy has now grown for four consecutive months, its longest winning streak since before the oil shock began in 2014. 

The loonie gained strength on the news, trading as high as 77.65 cents US, its highest level since October of last year.

"Today's monthly GDP report is perhaps the most encouraging in recent memory," TD economist Brian DePratto said. "Strength was broad-based, with nearly all major industries growing in January."

"Evidence continues to mount that the rotation towards manufacturing/export led growth is now beginning to take place."

'Not a fluky rebound-type bounce'

BMO economist Doug Porter agreed, saying he's especially impressed by the consecutive months of gains, which suggests it's not a "fluky rebound-type bounce," as he put it.

The irony, Porter said, is that January was a time when the loonie, oil prices and the TSX were in freefall because of  investor fears about weak growth. Meanwhile, the real economy was quietly doing very well.

"Suddenly, the Canadian economy has managed to post a rip-roaring annualized growth rate of five per cent over the past three months — and who could have believed earlier this year that the phrases 'Canadian economy' and 'rip-roaring' would be seen in the same sentence," he said.

The strong showing is good news for Ottawa's books too. The recent federal budget assumed the economy would grow at about a 1.4 per cent pace this year. January's GDP number makes two per cent growth this year a reasonable expectation, Porter noted.