Investing.com -- The Canadian economy maintained a modest growth trajectory at the start of the year, supported by a resurgence in the extraction and construction sectors. Real gross domestic product nudged up 0.1% in January, following a revised 0.2% expansion in the final month of 2025.

Goods-producing industries led the advancement with a 0.2% increase, primarily fueled by a rebound in oil and gas extraction. "The Canadian economy advanced by 0.1% m/m to start the year, a tick above the consensus expectation and the advance estimate," noted CIBC economist Katherine Judge.

The energy sector saw a 1.2% jump as crude petroleum production in Newfoundland and Labrador and Saskatchewan surged. However, this momentum was tempered by a significant 1.4% contraction in manufacturing, which suffered from prolonged holiday shutdowns at Ontario automotive plants.

The automotive slump rippled through the broader economy, dragging down wholesale trade and machinery production. "That was driven by strength in goods-producing sectors, namely oil and gas extraction, mining/quarrying, and construction, which masked a decline in manufacturing," Judge added.

The construction sector remained a bright spot, posting its third consecutive monthly gain with a 1.1% increase. Residential building and engineering projects reached new peaks, even as the real estate market saw its first decline in ten months.

Extreme winter weather weighed heavily on the services side, causing disruptions in transit operations and air travel. Despite these seasonal headwinds, early data suggests a pickup in February as the manufacturing sector begins to recover from its January lull.

Foreign appetite for Canadian debt provided a boost to the financial sector, which recorded its strongest growth since late 2025. Record international investment in Canadian bonds helped the finance and insurance industry expand by 0.5% during the period.

Looking ahead, an advance estimate from Statistics Canada suggests GDP grew by 0.2% in February. Judge concluded that this performance "leaves Q1 GDP tracking roughly in line with the Bank of Canada's MPR forecast of just under 2%."