Economy pulls back 0.1 per cent in January

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Canada's gross domestic product unexpectedly shrank in January, as the economy faces a broad slowdown after surging a year ago.

After leading the Group of Seven in growth last year, the report is consistent with what is widely expected to be a sharp drop off in Canadian economic growth this year as highly indebted households pare spending.

The Canadian dollar was little changed following the report, trading up 0.1 percent to C$1.2916 per USA dollar at 8:52 a.m.in Toronto trading. This is below the already-reduced 0.1% rate of growth seen back in December and substantially beneath the 0.6% growth recorded for January previous year.

Fearing high levels of consumer debt, the bank has raised interest rates three times since last July.

Statistics Canada attributes the fall to a decline in non-conventional oil output, which posted its largest decline since May 2016, and decreased transaction activity in the real estate market.

In January, the central bank forecast first-quarter annualized growth of 2.5 per cent, but it looks set to cut that estimate when it issues updated numbers on April 18.

The growth of 0.5% has been recorded in the manufacturing sector in January.

Meanwhile services-producing industries was essentially unchanged for the month as real estate and rental and leasing fell 0.5 per cent, offset by increases in the wholesale, retail, and finance and insurance sectors.

It has declined by 2.7% in January, 2018.

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