(Ottawa) Real gross domestic product (GDP) increased by 0.6% in January in Canada, notably due to the end of strikes in the public sector which took place in November and December in Quebec, indicated Thursday Statistics Canada.
The agency added that it expects growth to continue in February with a preliminary estimate showing a gain of 0.4% for the month, helped by strength in the mining, quarrying, oil and gas extraction, manufacturing, and finance and insurance.
Randall Bartlett, senior director, Canadian economy at Desjardins, believes that the Canadian economy is starting the year on a “very good foot”.
“Beyond the overall performance above expectations, the real GDP figures for January 2024 are cause for celebration. The rebound in education services was widely expected, but the gains are far from limited to this sector,” he said in an analysis.
“Indeed, all service sectors experienced progress during the month. This includes sectors such as accommodation and food services, arts and entertainment and retail, all of which are linked to discretionary household spending, which is increasingly subject to the burden of high borrowing costs. , added Mr. Bartlett.
Same story for Andrew Grantham, senior economist at CIBC, who says that the Canadian economy seems to have started 2024 on the fast track.
Although January’s growth was flattered by a rebound in the public sector following strikes in Quebec, solid momentum also appears to have extended into February.
Andrew Grantham, senior economist at CIBC, in a note to clients
Mr. Grantham added that with growth for the entire first quarter well above the Bank of Canada’s previous expectations, there is no urgency for the central bank to cut interest rates at its meeting. of April.
“However, intervention in June is still possible if labor market conditions continue to ease and core inflation maintains its downward momentum,” he said.
Reduction in interest rates in sight
The Bank of Canada’s key interest rate is set at 5%. The central bank expects to be able to begin cutting interest rates later this year, but according to its latest summary of deliberations, its officials are divided on the timetable.
Year-on-year inflation stood at 2.8% in February, but the central bank remains concerned that inflation may run faster than expected, especially as housing costs continue to climb.
The public sector, which includes educational services, health care and social assistance, as well as public administration, grew 1.9% in January, after declining for two consecutive months, Statistics Canada said. THURSDAY.
This increase came as the educational services sector gained 6.0% after falling in November and December due to strikes in Quebec. The health care and social assistance sector, also affected by strikes, increased 0.8%.
Mining and oil sectors in decline
According to Statistics Canada, production in service-producing industries increased by 0.7% for the first month of 2024, while that of goods-producing industries increased by 0.2%.
The manufacturing sector grew 0.9% in January, while the utilities sector gained 3.2% due to falling temperatures in parts of the country.
Overall, 18 of 20 sectors increased in January.
The mining, quarrying and oil and gas extraction sector fell 1.9%.
Oil and gas extraction fell 4.4% in January, after reaching a record level in the previous month. Production declined as freezing temperatures were recorded across the Prairies in January.