Canada’s economy showed steady growth in January 2025, with real gross domestic product (GDP) rising by 0.4%, following a 0.3% increase in December. This marks a positive start to the year, with growth across goods-producing and services-producing industries. In total, 13 out of 20 sectors reported gains in January.
The largest contributor to January’s growth came from goods-producing industries, which grew by 1.1%. This is the most significant increase since October 2021. The mining, quarrying, and oil and gas extraction sector played a crucial role, with a 1.8% increase in output. The sector’s growth was driven mainly by higher oil and gas extraction, particularly from oil sands, which rose by 3.6%. This marks the fourth increase in six months for oil sands extraction, reflecting Alberta’s robust synthetic crude production.
Manufacturing also saw a 0.8% rise in January, reversing two consecutive months of decline. The growth was led by durable goods manufacturing, which increased by 2.0%. This was driven by a strong performance in primary metal manufacturing, particularly in iron and steel mills, which grew by 12.2%. Transportation equipment manufacturing also contributed to the sector’s rebound, with a 2.2% increase, driven by higher production of motor vehicles, including electric models.
For the second month in a row, the utilities sector saw significant growth, rising by 2.7%. The increase was driven by electric power generation, transmission, and distribution, which rose by 2.8%. A cooler-than-usual January increased demand for heating, which helped boost the sector’s performance. Hydroelectric power generation also increased, benefiting from improved water levels due to easing drought conditions in some parts of Canada. In addition, natural gas distribution grew by 3.2%, reflecting higher demand across residential, commercial, and industrial customers.
Construction activity rose by 0.7% in January, marking the sixth increase in the last seven months. Residential building construction saw the largest increase, up by 1.4%. This was driven by greater activity in multi-unit housing projects in Ontario and increased home renovations. Non-residential building construction also grew by 1.2%, led by public and industrial building projects.
While the overall economy grew, the retail sector faced challenges. Retail trade contracted by 0.9% in January after being a major contributor to growth in December. The biggest decline came from motor vehicle and parts dealers, which saw a 3.2% drop in activity. This was the first decline in four months for this subsector. Food and beverage stores also saw a decrease, down 2.6%, with a drop in supermarket sales. However, some retail subsectors did see gains, including health and personal care stores, which grew by 1.3%, and building material dealers, which rose by 1.6%.
Wholesale trade showed a 0.7% increase in January, recovering from two consecutive months of decline. Motor vehicle and parts wholesalers were the main drivers of this growth, rising by 4.5%. Building material wholesalers also contributed, with a 1.8% increase, driven by higher activity in lumber, millwork, and hardware supplies.