Canada's economy surprises with 0.3% growth in January, offsetting 2 straight monthly declines

Canada's economy grew by 0.3 per cent in January, fully offsetting the small declines in the previous two months.

Statistics Canada reported Friday that 18 of 20 industries the data agency tracks got bigger.

Goods-producing industries grew by 0.6 per centwhile the service sector eked out a 0.2 per cent gain. Economists had been expecting a slight gain of about 0.1 per cent, according to Bloomberg estimates.

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Manufacturing grew by 1.5 per cent, also more than offsetting declines in November and December.

After shrinking for seven months in a row, the construction sector expanded by 1.9 per cent during the month the biggest monthly expansion since the summer of 2013.

"It was nice to see construction turn in a positive performance after more than half a year in decline," economist Brian DePrattowith TD Bank said.

Finance and insurance grew by 0.4 per cent, while retail was flat.

One source of weakness was the mining, quarrying, and oil and gas sector, whichwas down for the fifth consecutive month in January, contracting3.1 per cent.

Outside of energy, the only industry that shrank wasaccommodation and food services, which contracted by 0.5 per cent during the month.

Scotiabank economist Derek Holt said the weakness in oil was certainly significant, but he was encouraged by strength just about everywhere else.

"There is more to the economy in the Great White North than just oil and that's the exclamation point attached to this growth reading,"Holt said.

"This is significant because it was not long ago when there was widespread agreement that the economy would stumble into the new year given energy sector challenges."

DePratto was also encouraged by the breadth of the gains in just about every sector.

"We were expecting a more muted report, but ...we got a solid print, front to back."