The Canadian economy grew +0.3% m/m in January, much faster than expectations of only +0.1%. It was a welcome relief as the economy had shrunk in three of the four prior months. Growth was widespread across 18 of 20 major sectors, and the resulting +1.6% y/y rate starts off Q1 with an unexpected boost. Construction rose a very stiff +1.9% m/m, the first gain in eight months. Manufacturing increased +1.5% m/m, the first increase in three months. However the energy sector fell -0.6% m/m, the third loss in four months, as the industry struggles with mandatory production cuts. Ex-energy, the economy grew +0.4% m/m and +1.8% y/y. We expect the Canadian economy to grow by +1.6% for all of 2019, a bit cooler than 2018’s +1.8%, primarily because of a slowing U.S. economy, trade uncertainties, and unstable energy and housing sectors.
