Some growing stacks of coins with the word GDP (gross domestic product) on them

Economic growth resumed in January and came in better than first expected following a small contraction in December, Statistics Canada said Friday.

Real gross domestic product rose 0.5% to start the year, the agency said, beating its initial estimate for a gain of 0.3% for the month and reversing a contraction of 0.1% in the final month of 2022.

Statistics Canada also said its initial estimate for February indicates growth continued with a gain of 0.3%, though it cautioned the figure will be updated.

“There were many indications that the economy got off to a solid start in 2023, but today’s double-barrelled blast of strength is well above even the most optimistic views,” BMO chief economist Douglas Porter wrote in a report.

“Even if growth stalls in March, it now looks like Q1 will post growth of 2.5%, up from a flat read in Q4. While we continue to look for a notable cooldown in the next two quarters, we are bumping up our GDP growth estimate for all of 2023 by three ticks to 1.0%.”

The growth in January came as goods-producing industries gained 0.4% for the month, while services-producing industries rose 0.6%.

Statistics Canada said many of the main drivers for growth in January also contributed the most to the decline in December.

The wholesale trade, transportation and warehousing, and mining, quarrying and oil and gas extraction sectors all rebounded after falling in the previous month.

Wholesale trade gained 1.8% in January, helped by wholesalers of machinery, equipment and supplies, while the mining, quarrying and oil and gas extraction sector grew 1.1% after falling 3.3% in December.

The transportation and warehousing sector added 1.9% in January, more than offsetting a drop of 1.1% in December that was due in part to bad weather.