Canada’s economy experienced a modest growth spurt in January, with gains in goods-producing sectors offsetting a slowdown in manufacturing, according to Statistics Canada. The Gross Domestic Product (GDP) expanded by 0.1% during the month, surpassing analysts’ predictions following a 0.2% growth in December.

Key drivers of the growth were mining, oil and gas extraction, and quarrying, which collectively expanded by 1.2%, reversing the declines seen in the previous month. Increased crude petroleum extraction in Newfoundland and Labrador, as well as Saskatchewan, contributed to the growth in the oil and gas sector, along with the expansion in natural gas extraction.

The construction industry also showed positive growth, increasing by 1.1% in January for the third consecutive month. Both residential and non-residential building construction saw expansions during this period. Chief economist at the Bank of Montreal, Douglas Porter, described the report as a “pleasant surprise,” noting that the Canadian economy performed better than expected in the early months of the year.

While manufacturing declined in January, particularly in the durable goods subsector, wholesale trade, especially for motor vehicles and parts, also saw a decrease. Weather-related issues affected the transportation and warehousing sectors, with exports of passenger cars and light trucks declining due to a seasonal slowdown in auto production.

On the other hand, services-producing industries like real estate, health care, and finance, which are significant contributors to the Canadian economy, experienced minimal changes in January. The advance estimate for February suggests a 0.2% increase in real GDP, although this figure is subject to revision.

Despite concerns about the impact of high crude oil prices resulting from the conflict in Iran affecting consumer spending and inflation, the positive performance in January and the anticipated growth in February have set a favorable tone for the first quarter. Economists warn that future growth might face challenges due to these external factors, potentially leading to a hike in interest rates by the Bank of Canada amid economic vulnerabilities.