January sees significant growth across industries, with education and manufacturing leading the recovery
In January, Canada's real gross domestic product (GDP) experienced growth of 0.6 percent, as reported by Statistics Canada.
This increase was predominantly led by the services-producing industries, which saw a growth of 0.7 percent, significantly buoyed by the educational services sector. This sector rebounded notably following the resolution of public sector strikes in Quebec during November and December.
Meanwhile, the goods-producing industries registered a modest increase of 0.2 percent, with both the utilities and manufacturing sectors making a comeback from the previous month's declines. A widespread expansion was observed, with 18 of the 20 sectors reporting growth in January.
The public sector, encompassing educational services, health care and social assistance, and public administration, marked a recovery from the preceding two months of declines, recording a 1.9 percent increase in January.
The educational services sector was the standout performer, with a significant 6.0 percent growth, largely as activities resumed post the Quebec public sector workers' strikes. This sector's largest boost came from the elementary and secondary schools' industry group, which alone contributed a 10.2 percent growth.
However, the onset of a strike by the Saskatchewan Teachers' Federation, representing about 13,500 teachers, slightly tempered the sector's overall growth.
The manufacturing sector saw a complete recovery from December's downturn, posting a 0.9 percent increase in January. The surge was primarily driven by durable goods manufacturing, which increased by 0.9 percent, thanks largely to the transportation equipment manufacturing subsector's 3.0 percent rise.
The motor vehicle manufacturing industry, after facing four consecutive months of decline, rebounded with a 4.9 percent increase as auto assembly plants resumed production following retooling-induced shutdowns.
The motor vehicle parts sector also saw a recovery, with a 3.5 percent increase after a 3.7 percent drop in December.
Non-durable goods manufacturing reported a 1.0 percent increase in January, with five of nine subsectors expanding.
The utilities sector experienced its most significant growth rate since January 2022, with a 3.2 percent increase. This was primarily due to a sudden drop in temperatures mid-January, which led to heightened activity.
Electric power generation, transmission, and distribution saw a 3.4 percent expansion, driven by surging demand in the western parts of the country that pushed generating capacities to their limits. Natural gas distribution contributed to the sector's growth with a 3.4 percent increase.
However, rail transportation faced challenges, contracting by 4.9 percent in January, as severe winter weather conditions in Western Canada necessitated operational adjustments and train length restrictions for safety.
The mining, quarrying, and oil and gas extraction sector witnessed a 1.9 percent decline in January, following three months of consecutive growth. Oil and gas extraction suffered a significant 4.4 percent decrease after hitting a record high the previous month.
The oil sands extraction saw a 5.2 percent decline, marking the largest monthly contraction since August 2020, which was -7.7 percent. Oil and gas extraction (except oil sands) also contracted by 3.6 percent, influenced by reduced crude oil extraction in Alberta and lower production from Canada's North Atlantic coast.
Pipeline transportation experienced a 1.8 percent decline in January, its largest contraction since May 2023. Crude oil and other pipeline transportation were down 4.4 percent as exports to the US contracted during the month. Despite a decrease in storage and exports, pipeline transportation of natural gas saw a 0.8 percent increase.
Mining and quarrying (except oil and gas) also declined by 0.7 percent in January, following three months of growth. Coal mining, with a -14.4 percent contraction, was the major contributor to this decline, marking its most significant monthly contraction since March 2022.
The declines were primarily in mines located in Nova Scotia and Alberta, attributed to reclamation activities and a shift from coal to natural gas as inputs to electricity generation plants.
The real estate and rental and leasing sector grew by 0.4 percent in January, marking its third consecutive month of growth.
This was driven by a 4.0 percent increase in activity at the offices of real estate agents and brokers, with the Greater Toronto Area, Hamilton-Burlington, and most markets in Ontario's Greater Golden Horseshoe area contributing significantly to this growth.
The information and cultural services sector saw a 1.0 percent growth in January, its largest growth rate since August 2021.
The motion picture and sound recording industry, with a 12.0 percent increase, played a significant role in this growth as activity ramped up following the end of the Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA) strike in November.
Several television shows and other productions began or resumed in Toronto and Vancouver areas in January.
Looking ahead, preliminary data suggests that real GDP rose by 0.4 percent in February 2024. This estimate indicates broad-based increases across several sectors, including mining, quarrying, and oil and gas extraction, manufacturing, and finance and insurance, albeit partially offset by decreases in utilities.
Due to its preliminary nature, this estimate is scheduled for an update on April 30, when the official GDP by industry data for February will be released.
