Investing.com -- On Friday, Statistics Canada reported Canada's real gross domestic product (GDP) experienced a 0.4% increase in January 2025, following a 0.3% rise in December, and beating economist forecasts of a 0.2% gain. Goods-producing industries were the primary contributors to this growth, with a significant 1.1% surge, marking the largest monthly increase since October 2021. All industrial sectors within this aggregate reported expansion during the month. Services-producing industries also saw an increase, albeit a modest 0.1%.
The mining, quarrying, and oil and gas extraction sector was a standout performer, with a 1.8% growth in January. This sector's expansion was consistent across all three subsectors, making it the second consecutive month of growth. The oil and gas extraction subsector, in particular, witnessed a substantial 2.6% expansion, driven primarily by a 3.6% increase in oil sands extraction due to higher synthetic crude production in Alberta.
Manufacturing also rebounded with a 0.8% rise in January, led by a 2.0% increase in durable-goods manufacturing, which saw 8 of its 10 subsectors rise. Notably, primary metal manufacturing and transportation equipment manufacturing were significant contributors, with the former achieving its highest growth rate since August 2020.
Utilities continued their positive trajectory for the second month in a row, with a 2.7% increase in January, following a 5.0% jump in December. Electric power generation, transmission, and distribution, which rose by 2.8%, spearheaded the growth within this sector.
The construction sector also reported positive numbers, with a 0.7% growth in January. This was largely due to increases in residential building construction, which saw its activity reach the highest level since November 2023. Repair construction and non-residential building construction also saw gains, contributing to the overall rise in the construction industry.
Conversely, the retail trade sector faced a 0.9% decline in January, following a strong performance in December. This decrease was influenced by reduced activity in motor vehicle and parts dealers, food and beverage stores, and sporting goods, hobby, book, and music stores.
Wholesale trade, however, managed to rebound with a 0.7% increase in January. The motor vehicle and parts wholesaler-distributors subsector was particularly strong, achieving its highest level since February 2020.
Looking ahead, preliminary data suggests that real GDP by industry in February 2025 remained essentially unchanged. The manufacturing and finance and insurance sectors saw increases, but these were offset by declines in the real estate and rental and leasing sector, the oil and gas extraction subsector, and the retail trade sector. This advance estimate will be revised on April 30, 2025, with the release of official data for February.
In the broader context of international trade, Canada's exposure to the US market remains significant, especially in the manufacturing sector. In 2023, exports to the United States constituted 16.8% of Canadian GDP and supported over 2.6 million jobs. Primary metal manufacturing, in particular, depended heavily on the US market, with a large portion of its output driven by direct and total demand from the United States.
