Canadian growth at the start of 2026 turned out stronger than most economists have pencilled in, offering a rare upside surprise just as fresh geopolitical and energy shocks loomed over households and lenders.
Statistics Canada’s latest figures showed real GDP edged up 0.1% in January, with an advance estimate pointing to a 0.2% gain in February.
Douglas Porter, chief economist at BMO, called it “a pleasant surprise, for a change,” noting that the economy appeared “in somewhat better shape than anticipated heading into the turmoil.”
Porter said the real story lay in what he described as a “revenge of the old economy,” with mining and oil and gas output rising 1.2% in January and construction up 1.0% despite “all the dire headlines about residential activity.”
Even with manufacturing tumbling 1.4% month‑over‑month and 4.6% year‑over‑year on extended auto shutdowns, the goods‑producing side still managed to “pound out a 0.2% rise in January,” he said.
Services activity was largely flat as weakness in wholesale trade and transportation offset steadier categories. “Consumers were doing their thing, with retail trade up 0.8% (and a sturdy 2.7% y/y), while hotels & restaurants rose 0.7% (2.3% y/y),” Porter said, adding that “finance & insurance is another strong point at up 0.9% and 3.2% y/y.”
From a year earlier, real GDP in January was only 0.6% higher – a pace Porter characterized as the economy “just keeping its head above water,” even with support from defence spending, infrastructure programs and a 7.3% surge in data‑centre‑related activity.
Bottom line for growth and rates
In his latest outlook, Porter said the one‑two punch of stronger‑than‑expected January and February readings “sets a much better tone to Q1 than anticipated.”
BMO revised its Q1 annualized growth call up to 1.5% (from 0.8%), closer to the Bank of Canada’s January projection of 1.8%.
He cautioned, however, that the recent spike in fuel costs is likely to “weigh on consumer sentiment and take a bite out of spending in the coming months,” with growth seen ebbing to 1.0% in Q2 and about 1.0% for 2026 as a whole.
That modest trajectory broadly aligns with other recent forecasts that have kept mortgage professionals focused on a low‑growth, higher‑for‑longer environment.
Deloitte’s early‑2026 outlook, for example, pointed to a “year of two halves” with subdued momentum early on and a slightly firmer second half, while still trimming its GDP call and emphasizing trade and population‑growth risks for housing and credit demand.
The latest GDP surprise suggests that Canada entered the current oil‑price and geopolitical shock with a bit more forward motion than feared – but not enough to dramatically change the story for mortgage professionals.
For brokers, lenders and investors, early‑year resilience bought the economy time, not a boom, and the mortgage business still needs to plan for a year defined by slow growth, cautious consumers and a rate path that rewards prudence over optimism.
CMP
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