| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Month over Month | 0.4% | 0.6% | 0.0% | -0.1% |
| Year over Year | 0.9% | 1.1% | 1.0% |
Highlights
The Canadian economy started the year on a more positive note than anticipated as it expanded 0.6 percent in January, beating expectations of 0.4 percent in an Econoday survey, even when factoring in a downward revision of the previous month when activity contracted 0.1 percent after being initially reported as flat.
The advance estimate for February points to a further 0.4 percent increase on the month on widespread gains.
Today's stronger-than-expected data will weigh in favor of a longer wait before the Bank of Canada starts cutting interest rates, especially with February estimates pointing to a further solid monthly expansion. Econoday's Relative Performance Index is now indicative of an economy performing appreciably more than expected.
The expansion in January was broad based across 18 of 20 sectors, led by a 0.7 percent growth in services as educational services rebounded following the resolution of public sector strikes in Quebec in December and November. Educational services surged 6.0 percent on the month after declines of 3.8 percent in December and 2.3 percent in November. The rebound could have been even stronger if not for a strike by the Saskatchewan Teachers' Federation, which represents around 13,500 teachers, that started in January. Overall, public sector activity - educational services, health care and social assistance and public administration was up 1.9 percent in February after two months of retreat.
Elsewhere in services, real estate and rental and leasing was up 0.4 percent on higher resale activity. Information and cultural services increased 1.0 percent, led by a 12.0 percent surge in the motion and sound recording industry following the end of a strike in November, with TV shows and other productions resuming. Finance and insurance edged up 0.1 percent after rising 0.8 percent the previous month, with advance estimates pointing to a further increase in February.
Good-producing industries recovered 0.2 percent after contracting 0.5 percent in December. Manufacturing rebounded 0.9 percent after declining 0.8 percent in December, with non-durables up 1.0 percent and durable manufacturing up 0.9 percent. Utilities rose 3.2 percent after falling 3.7 percent. On the downside, construction decreased 0.5 percent in a fourth consecutive retreat. Mining, quarrying, and oil and gas extraction was down 1.9 percent, with energy down 0.7 percent overall. The industry sector was up 0.5 percent, reversing the previous month's drop. In February, advance estimates point to an increase in mining, quarrying, and oil and gas extraction, manufacturing partly offset by a decrease in utilities.
The advance estimate for February points to a further 0.4 percent increase on the month on widespread gains.
Today's stronger-than-expected data will weigh in favor of a longer wait before the Bank of Canada starts cutting interest rates, especially with February estimates pointing to a further solid monthly expansion. Econoday's Relative Performance Index is now indicative of an economy performing appreciably more than expected.
The expansion in January was broad based across 18 of 20 sectors, led by a 0.7 percent growth in services as educational services rebounded following the resolution of public sector strikes in Quebec in December and November. Educational services surged 6.0 percent on the month after declines of 3.8 percent in December and 2.3 percent in November. The rebound could have been even stronger if not for a strike by the Saskatchewan Teachers' Federation, which represents around 13,500 teachers, that started in January. Overall, public sector activity - educational services, health care and social assistance and public administration was up 1.9 percent in February after two months of retreat.
Elsewhere in services, real estate and rental and leasing was up 0.4 percent on higher resale activity. Information and cultural services increased 1.0 percent, led by a 12.0 percent surge in the motion and sound recording industry following the end of a strike in November, with TV shows and other productions resuming. Finance and insurance edged up 0.1 percent after rising 0.8 percent the previous month, with advance estimates pointing to a further increase in February.
Good-producing industries recovered 0.2 percent after contracting 0.5 percent in December. Manufacturing rebounded 0.9 percent after declining 0.8 percent in December, with non-durables up 1.0 percent and durable manufacturing up 0.9 percent. Utilities rose 3.2 percent after falling 3.7 percent. On the downside, construction decreased 0.5 percent in a fourth consecutive retreat. Mining, quarrying, and oil and gas extraction was down 1.9 percent, with energy down 0.7 percent overall. The industry sector was up 0.5 percent, reversing the previous month's drop. In February, advance estimates point to an increase in mining, quarrying, and oil and gas extraction, manufacturing partly offset by a decrease in utilities.
Market Consensus Before Announcement
After no change in December, GDP in January is expected to rise a noticeable 0.4 percent.
Definition
Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. In contrast to most industrialised countries a monthly estimate is provided derived from the value added by labour and capital in transforming inputs purchased from other producers into that industry's output. Data for the reference month are usually released close to the end of the second month after the reference period.
Description
Instead of producing an advanced quarterly GDP figure and revising it the following two months, Statistics Canada releases monthly estimates of real GDP at Basic Prices. This release breaks down real output by seven goods-producing industries and twelve service-producing industries, and includes special aggregations such as business sector, non-business sector, and industrial production.
The sources of data used for monthly and quarterly estimates often differ and leads to very different estimates for certain items, such as price deflators. As a result, the monthly figures are not perfectly correlated with the quarterly numbers. However, the monthly data do give some idea of where the quarter is headed and especially in an uncertain environment, they are closely watched. While industrial production is closely watched in the U.S., it is not in Canada especially since the economy has become increasingly dominated by services. However, the goods sector is more vulnerable to wide swings in output compared to services, and exports remain dominated by industrial output.
The sources of data used for monthly and quarterly estimates often differ and leads to very different estimates for certain items, such as price deflators. As a result, the monthly figures are not perfectly correlated with the quarterly numbers. However, the monthly data do give some idea of where the quarter is headed and especially in an uncertain environment, they are closely watched. While industrial production is closely watched in the U.S., it is not in Canada especially since the economy has become increasingly dominated by services. However, the goods sector is more vulnerable to wide swings in output compared to services, and exports remain dominated by industrial output.
