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, Statistics Canada indicated on Thursday.
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.
Andrew Grantham, senior economist at CIBC, says the Canadian economy appears to have entered 2024 on the fast track.
“Although January growth was flattered by a rebound in the public sector following strikes in Quebec, strong momentum appears to have extended into February as well,” he wrote 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.
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.
1.9% increase in the public sector
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%.
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.