Canadian Economy Beats January Expectations

According to Statistics Canada, real gross domestic product expanded by 0.3 per cent in January, far exceeding expectations. Surveys of economists with the Royal Bank of Canada as well as Bloomberg forecasted no more than a 0.1 per cent growth, so the surge was an unexpected but pleasant surprise. This is the largest increase over a one month period in over five years.

Gross domestic product (GDP) is a broad way to measure goods and services that an economy produces. The weaknesses experienced in gross domestic product were in industries such as oil and gas extraction. Industries such as this suffered most in the cold weather of the late 2018 months, as inclimate weather often lead to the shutdown of activities and maintenance.

The expansions, however, were experienced in goods-producing industries, manufacturing, and the construction sector. Food, petroleum and coal products, and chemical manufacturing were just some of the most successful industries in the Canadian economy this quarter. All types of construction are also an increasing industry, with a growth like this unseen in this market since 2013.

Another industry growing in the current economy is real estate. Real estate, rental, and leasing grew 0.4 per cent, while real estate agent and broker activity grew over 4 per cent. This is an extreme hike, as this growth in January came after four months of declining activity in this industry. As housing resale is beginning to rise in the Canadian market, now would be a great time to look into real estate investment in the major metropolitan areas, such as the Ottawa real estate market. Impacting potential sales, a program was announced recently to create incentive for first-time homebuyers, making it easier than ever for young professionals to settle down in a home of their own.

The retail market balanced itself out, with increases in things like the clothing and fashion industry, but decreases in areas such as auto dealers and auto parts stores. The fluctuation in this area may have a lot to do with overall Canadian consumer confidence being low. However, it is currently on the rise, particularly with this new economic boost. Many Canadians believe their personal financial situations have improved in the last year. With an increasing certainty regarding job security, the real estate market, and the overall outlook on the economy rising, it is believe that consumer confidence will continue to rise, albeit slowly, in the future.

This growth in the first quarter has dispelled fears of a recession, though there is still reason to stay cautious. While the expansion is welcome, the Bank of Canada warns of a weaker economic performance coming in the next few months. We can hope that, while there may be some weaknesses ahead, the economy will experience slow and steady overall growth.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.