Statistics Canada says the economy grew 0.7 per cent in January.
The increase in real gross domestic product compared with a gain of 0.1 per cent in December.
The growth also topped the agency’s preliminary estimate for the month of 0.5 per cent.
It was the ninth consecutive monthly increase since the plunge in the economy last year at the start of the pandemic in March and April.
However, Statistics Canada noted that total economic activity was still about three per cent below the February level last year, before the pandemic began.
The agency’s preliminary estimate for February this year shows growth of 0.5 per cent for the month.
For January, manufacturing, construction and real estate all contributed to economic growth.
The manufacturing sector expanded 1.9 per cent in January, offsetting a 0.7 per cent contraction in December.
The gain in GDP is impressive considering that an early estimate pegged the increase at 0.5 per cent, said Douglas Porter, an economist at the Bank of Montreal.
He said many forecasts issued a few months ago called for a decline in first-quarter GDP, but the latest estimate from BMO Economics predicts an increase of 3.5 per cent.
“The economy held up much better than expected through the second wave [of pandemic] restrictions through the winter,” Porter said in a statement.
Wholesale trade was up 3.9 per cent in January, following a 1.5 per cent contraction in December.
“A big rebound in wholesale trade more than offset the drop in retail activity, in part due to a shift to online spending,” Porter said.
Clothing stores down 17%
The hardest hit brick-and-mortar retailers included clothing and clothing accessories stores — down 17 per cent — and sporting goods, hobby, book and music stores — down 14.1 per cent.
However, general merchandise stores grew 3.3 per cent, while building material and garden supply dealers saw a gain of 3.6 per cent because of home improvement projects.
Accommodation and food services declined three per cent in January, following a 6.7 per cent decrease in December. Meanwhile, non-store retailers expanded activity for the third month in a row, rising by 2.8 per cent in January.