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Canada's economy kicked off 2026 on steady footing, with real gross domestic product rising 0.1% in January — slightly ahead of market expectations — following a 0.2% gain in December 2025. The modest expansion was largely driven by goods-producing industries, which collectively grew 0.2%, masking weakness elsewhere in the economy.
The energy sector was a standout performer, surging 1.2% as crude petroleum output climbed in Newfoundland and Labrador and Saskatchewan. Mining, quarrying, and construction also contributed positively, with the construction sector recording its third straight monthly gain at 1.1%. Residential building and engineering projects both hit new highs during the period, signaling continued confidence in Canada's infrastructure and housing development pipeline.
Manufacturing, however, moved in the opposite direction, contracting 1.4% due to extended holiday shutdowns at automotive plants in Ontario. This weakness spilled over into wholesale trade and machinery production, putting a ceiling on broader economic momentum. Extreme winter conditions added further pressure on the services sector, disrupting transit networks and air travel across the country.
On the financial side, record foreign investment in Canadian bonds pushed the finance and insurance industry up 0.5%, marking its strongest monthly performance since late 2025. Heightened international demand for Canadian debt underscored ongoing global confidence in the country's fiscal stability.
Looking at the broader picture, CIBC economist Katherine Judge noted that the January result leaves first-quarter GDP tracking in line with the Bank of Canada's forecast of just under 2% annualized growth. Statistics Canada's advance estimate also points to a 0.2% GDP gain in February, suggesting the manufacturing sector is beginning to recover from its January slowdown.
Overall, Canada's economy is navigating a mixed landscape — balancing resource sector strength against industrial headwinds — as it moves through the early months of 2026.
