Data for Business: January GDP Beats Expectations with Growth at 0.6%
Data for Business: January GDP Beats Expectations with Growth at 0.6%
"Data For Business' is an effort of the Langley Chamber, in partnership with the Canadian Chamber, to bring our members reports, stats and analysis on economic and business data to help inform business and investment decisions. Read our latest update below:
Real gross domestic product increased by 0.6% in January 2024 (above the consensus forecasts of 0.4%). Services-producing industries grew by 0.7%, primarily driven by a rebound in educational services following the resolution of public sector strikes in Quebec. Goods-producing industries saw a modest increase of 0.2%, with notable rebounds in the utilities and manufacturing sectors.
Goods-producing industries were up 0.2% in January 2024 with the utilities and manufacturing sectors rebounding from declines in the previous month. Overall, there was broad-based growth with 18 of 20 sectors increasing in January.
Canada's economy continues to evade a recession, despite higher interest rates, potentially giving the Bank of Canada flexibility on whether it cuts rates in June as is largely expected.
Key Sectoral Takeaways:
- Information and cultural services increased by 1.0%, with the motion picture and sound recording industry contributing significantly to the growth. A number of television shows and other productions started or resumed in Toronto and Vancouver areas in the month, as activity continued to pick up following the end of the industry strikes last year.
- Manufacturing fully recovered December’s decline, growing by 0.9% in January. Durable goods manufacturing drove growth, with motor vehicle manufacturing and parts experiencing notable rebounds.
- A sudden drop in temperatures mid-January in parts of the country contributed to increased activity in the utilities sector (+3.2%), posting its largest growth rate since January 2022. Electric power generation, transmission and distribution expanded 3.4% in January 2024.
- Rail transportation fell for the second consecutive month, contracting 4.9% in January, as severe winter weather conditions in Western Canada forced train operators to adjust operations and restrict train lengths to maintain safety.
Commentary:
"January’s stronger-than-expected growth, boosted by temporary factors like the rebound in educational services and manufacturing, provides strong momentum for Canada’s economy in the first quarter (now on a 3.5% pace annualized). The robust expansion, notably exceeding the Bank of Canada’s forecast of 0.5%, provides some respite, and is delaying market expectations for a June rate cut. The surge in sectors such as utilities amid severe weather conditions underscores that while these temporary factors keep the Canadian economy afloat, there are no strong underlying signs of sustained growth amidst a backdrop of declining inflation."
- Andrew DiCapua, Senior Economist, Canadian Chamber of Commerce
