Economy dipped 0.1% in January: Statistics Canada

The Canadian economy contracted 0.1% in January, hurt by unscheduled maintenance shutdowns in the oilpatch and weakness in the real estate sector following mortgage rule changes, Statistics Canada said Thursday.

The agency said the drop in real gross domestic product for January compared with growth of 0.2% in December.

Economists had expected an increase of 0.1% for the first month of the year, according to Thomson Reuters.

“This year started off with more of a whimper than a bang, at least from a growth perspective,” TD Bank senior economist Brian DePratto wrote in a report.

“As usual though, the trend is more important than the noise. Clearly the pace of economic activity has moderated from last year’s red-hot first half performance, but this is to be expected in an economy with little slack remaining.”

Read: Millennials cushioning drop in Toronto, Vancouver house prices

Goods-producing industries fell 0.4% in January, while services-producing industries were essentially unchanged for the month.

Overall, the mining, quarrying, and oil and gas extraction sector posted its biggest drop since May 2016 as it fell 2.7% in January.

Non-conventional oil extraction fell 7.1% due to unscheduled maintenance shutdowns, while conventional oil and gas extraction fell 0.5% on lower crude petroleum and natural gas extraction.

Derek Holt, vice-president and head of capital market economics at Scotiabank, said in a report Thursday that the economy saw basically no growth even excluding the hit to one sector.

“Q1 growth tracking indicates a stalled economy,” wrote Holt in the report. “The overall tone of the report should feed a cautious Bank of Canada policy bias.”

Mining excluding oil and gas extraction fell 0.8% in January.

Meanwhile, real estate and rental and leasing fell 0.5% after six consecutive months of growth.

The output of offices of real estate agents and brokers posted its largest monthly decline since November 2008 as it fell 12.8% in January in the wake of the implementation of new mortgage rules, including stress-testing for uninsured mortgages.

Statistics Canada said lower activity in real estate contributed to a 0.1% drop in the professional, scientific and technical services sector as legal, accounting and related services contracted 1.9%.

Also read:

Widespread growth-including financial services-boosts GDP

Toronto area home sales down 35%, Montreal up 5%