Gross domestic product fell 0.7 percent during the month, Statistics Canada said today in Ottawa, in line with the median estimate of 21 economists surveyed by Bloomberg. Manufacturing declined 3.1 percent as fewer cars were produced, while construction slid 3 percent.
The world’s eighth-biggest economy is facing its first recession since 1992 amid tight credit conditions for businesses, slumping shipments of cars and lumber to the U.S., and lower prices for exported commodities such as oil. The Bank of Canada said on Jan. 20 gross domestic product will fall by 1.2 percent in 2009, and has since said that forecast is too optimistic.
Earlier this month, the Bank of Canada cut its benchmark lending rate to a record 0.5 percent, and said it is preparing to use policies beyond interest-rate moves, if needed, to revive the economy. The central bank will make its next policy announcement on April 21.
The drop in January output was broad-based, with 12 of 18 industries tracked by the statistics agency posting declines, Statistics Canada said. Retail trade led gainers with a 1.4 percent expansion in January.
The country’s largest industry -- finance, insurance and real estate -- posted a 0.1 percent drop in output.
Canada’s economy was 2.4 percent smaller in January than it was a year earlier, the agency said, the largest year-over-year decline in output since 1991.