Canada’s GDP Growth Turns Negative in January: Annualized Rate at -0.6%
Big-Picture Snapshot
- Drivers this month:
- Manufacturing output: -0.12pp
- Wholesale trade: -0.09pp
- Construction: -0.08pp
- Policy pulse: January’s -0.6% annualized GDP growth is well below the Bank of Canada’s 2% target.
- Market lens: Canadian dollar sold off sharply on release, with bond yields falling as investors recalibrated growth expectations. The negative print surprised markets, which had anticipated a flat reading.
Foundational Indicators
- January 2026: -0.6% annualized GDP growth
- November 2025: 2.6%
- August 2025: -1.6%
- May 2025: 2.2%
- February 2025: 2.6%
- 12-month average (Feb 2025–Jan 2026): 1.04%
- Policy pulse: The Bank of Canada’s inflation-adjusted growth target remains out of reach, with the latest reading marking the second contraction in six months.
- Market lens: Equities retreated on the news, led by cyclical sectors. Investors shifted toward defensive assets, reflecting concerns about the sustainability of Canada’s recovery.
Chart Dynamics
Forward Outlook
- Bullish scenario (20–30%): GDP rebounds to above 1.5% annualized in coming quarters, led by export recovery and easing financial conditions.
- Base case (50–60%): Growth remains subdued, fluctuating between -0.5% and 1.0% through mid-2026 as consumer demand and investment stay soft.
- Bearish scenario (15–25%): Prolonged contraction, with GDP growth below zero for multiple quarters, driven by persistent weakness in housing and business investment.
- Policy pulse: The Bank of Canada faces a difficult trade-off, as growth lags target and inflation risks persist.
- Market lens: Bond markets priced in lower growth expectations, with the yield curve flattening further. Investors are watching for signals on fiscal and monetary support.
Closing Thoughts
- January’s negative GDP growth print marks a setback for Canada’s recovery narrative.
- Historical context: This is the second contraction in six months, following August’s -1.6% reading.
- Upside and downside risks remain finely balanced, with external demand and domestic policy as key swing factors.
- Data source: Statistics Canada, Sigmanomics database. Methodology: Annualized quarter-over-quarter GDP growth, seasonally adjusted.
Key Markets Reacting to Gdp Growth Annualized
- AAPL (US equities): Apple’s Canadian revenue exposure makes it sensitive to CAD swings and Canadian consumer demand shifts.
- USDCAD (Forex): The currency pair reacts directly to Canadian GDP surprises, with CAD weakening on negative growth prints.
- BTCUSD (Crypto): Bitcoin’s correlation with risk sentiment means Canadian macro shocks can drive short-term volatility.
| Period | GDP Growth Annualized | USDCAD Movement |
|---|---|---|
| Feb 2025 | 2.6% | CAD strengthened modestly |
| May 2025 | 2.2% | CAD stable |
| Aug 2025 | -1.6% | CAD weakened sharply |
| Nov 2025 | 2.6% | CAD rebounded |
| Jan 2026 | -0.6% | CAD sold off |
FAQ
Q1: What is Canada’s latest annualized GDP growth rate?A1: Canada’s annualized GDP growth rate for January 2026 was -0.6%, marking a contraction from November’s 2.6%.
Q2: Why did GDP growth turn negative this month?A2: Broad-based declines in manufacturing, wholesale trade, and construction contributed to the negative print, reflecting weaker domestic demand and external headwinds.
Q3: How does this affect the Canadian dollar?A3: The negative GDP surprise led to a sharp selloff in the Canadian dollar, as markets reassessed growth and policy outlooks.
- [1] Statistics Canada, GDP Growth Annualized, January 2026 release.
- [2] Sigmanomics Economic Database, 2025–2026 historical GDP growth data.









January’s -0.6% annualized GDP growth reversed sharply from November’s 2.6%, falling well below the 12-month average of 1.04%. The last negative print was in August 2025 at -1.6%, while both May and February 2025 saw growth above 2%.
Volatility has increased over the past year, with alternating quarters of contraction and expansion. The current reading underscores the fragility of Canada’s economic momentum.