Canada's GDP Data "Mixed Overall", says Rosenberg Research

09:15 AM EDT, 04/01/2026 (MT Newswires) -- Although January GDP release is "old news", it does show the Canadian economy "expanding below trend in the pre-war data", according to veteran market watcher David Rosenberg.

"The pre-war economic data could scarcely be more stale, but Canada can at least boast, having experienced some better-than-expected output numbers ahead of the mess in the Middle East and the subsequent surge in energy and related costs," said Rosenberg after the release of Tuesday's GDP data.

Rosenberg noted Real GDP "inched ahead" 0.1% month over month in January, "despite the deep freeze weather-wise", and also noted Statistics Canada is estimating a 0.2% month-over-month advance for February.

The January number "modestly bested" the earlier 'advance' estimate of flat and the consensus estimate as well, he said. This places the "build in" for Q1 real GDP growth at 1.4% at an annual rate, which is an improvement, but still a tad below the most recent Bank of Canada projection of 1.8% increase, he added.

Rosenberg noted with February's estimate, the year-over-year trend in real GDP growth would be 1.0%, which may have a "plus" sign in front of it, but is a digit that is still below the economy's growth potential, and at a time when inflation and the core measures are basically at the BoC's target of 2.0%. "Which is why the money market needs to hire a shrink, because pricing in rate hikes is pure insanity," he said.

Whatever growth Canada had in January was centered in the energy patch, because the economy flatlined outside of that sector. So did industrial production for the month, down more than 2.0% year over year, Rosenberg noted. "Strip out both energy and associated utilities, and the economy actually contracted fractionally and has done so in three of the past four months."

"So, digging beneath the surface, there really wasn't a whole lot to write home about," said Rosenberg. "On the plus side, construction activity perked up by 1.1% month over month in the best month in nearly two years -- not matched by the real estate sector, which sagged by 0.2% -- and a surge in the auto sector gave a healthy 0.8% boost to retail trade."

The export-sensitive sectors, like manufacturing with a sharp 1.4% pullback, wholesale trade slumping 1.2%, and transportation services contracting by 0.7%, are saying that the Canadian dollar (CAD or loonie), as weak as it is at 72 cents (U.S.), should probably be even weaker, he added.

"The bottom line is that Tuesday's data release is old news and was mixed overall, despite beating market expectations," Rosenberg said. The economy was expanding below trend, which tells him that Canada's central bank is either on hold going forward or the next move will be a cut, "which serves up very good value for the front end of the Canadian bond curve".

"And," he added, "the pronounced weakness in the areas of the economy most sensitive to the loonie tells us that the trend for the Canadian dollar is not going to be anyone's friend, especially for the dwindling number of people going south in this revenge trade against the Trump tariff file."

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