Canada’s economy expanded less than expected in January even before the pandemic caused a virtual shutdown, reinforcing views the first quarter will be weak.

Gross domestic product rose 0.1 per cent from December, missing economist estimates for a 0.2 per cent gain, Statistics Canada reported Tuesday. That follows a 0.3 per cent jump in the prior month.

Tuesday’s numbers are largely moot since the growing coronavirus pandemic has changed the entire economic picture in the last month. The weaker-than-expected print backs up economists’ views that the economy will contract in the first quarter.

Embedded Image

Key Insights

  • January’s numbers were slightly affected by the outbreak in China through reduced trade and tourism, Statistics Canada said
  • Recent monthly GDP numbers do show some signs of recovery from a very weak end to 2019 -- with three straight monthly gains between November and January -- but that was all before the recent developments
  • The number will allow economists to fine tune their forecasts for first quarter growth, but expectations are for the quarter to show a contraction. The below-expected January number reinforces those estimates