Canadian GDP Growth Likely Stalls in January, But RBC Expects A Partial February Rebound

07:09 AM EDT, 03/30/2026 (MT Newswires) -- Canada will publish the gross domestic product for January on Tuesday at 8:30 a.m. ET, said RBC.

In line with Statistics Canada's advance estimate, the bank expects GDP growth to have slowed to essentially flat in January after rising 0.2% month over month in December.

Weakness was concentrated in the auto sector, where production disruptions at Ontario plants drove manufacturing and wholesale sales down 3.9% month over month and 1.5% month over month, respectively. Early indicators, however, point to a partial rebound in February as disruptions unwound, stated RBC.

Real estate agents and broker services also weakened, as unusually harsh weather dampened home resales in January, pointed out the bank. Strength in energy sectors offset these declines with Alberta's non-conventional oil production and mining -- excluding oil and natural gas -- both rising modestly after contracting in December. Retail sales increased 1% month over month, reflecting resilient household spending.

Spending resilience appears to have extended into February, added RBC. Early indicators, including the bank's tracking of RBC card spending data, as well as StatsCan's advance retail sales estimate -- a 0.9% nominal increase -- all point to an improvement.

Other advance industry estimates also showed recovery, according to the bank.

Manufacturing sales rose 3.8% month over month in nominal terms, according to StatsCan, driven by strength in transportation equipment and food product manufacturing. Wholesale sales increased 2.3% month over month, lifted similarly by higher auto and parts sales. Housing-related activity likely remained soft in February as home resales remained soft.

The Bank of Canada flagged downside risks to its 1.8% annualized GDP growth forecast for Q1 at the March policy meeting. After a weak January, improvements in activities in February and March, as auto disruptions eased, should still leave growth on balance in line with RBC's forecast for a "modest" increase.

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