Canada’s gross domestic product in January increased modestly by 0.2% from December as the effects of the omicron variant paused growth in the services sector.
The gain came entirely from goods-producing industries, which increased by 0.8%, while the services-producing industries saw no growth because of restrictions associated with omicron.
On a year-over-year basis, GDP grew by 3.6%.
The construction sector expanded by 2.8% mainly because of residential building. Even with the continuous growth over the past year and a half, the construction sector might not still be producing enough housing to solve the shortages in Canada.
In addition, wholesale trade grew by 3.1% as investment in mining and oil and gas picked up in response to high prices. Retail trade increased by 2.5% thanks to an increase in auto sales.
As the omicron variant peaked in January, public health restrictions followed, which resulted in the lack of growth among services-producing industries. But as long as the economy stays open, restaurants, hotels, and arts and entertainment will recover in the upcoming months.
Although businesses will have to contend with inflation, the demand for dining out, traveling and attending sports and arts events after two pandemic years will remain strong.
While the mining and oil and gas sectors contracted in January, this trend will quickly reverse. Geopolitical conditions, including sanctions, have created gaps in the global markets, and countries are turning to Canada as the ultimate resource-rich, safe and reliable supplier of commodities.
With high inflation threatening to dampen consumer demand, it is the commodities sector that will fuel Canada’s growth this year.