Canada's economy continued to recover in January, with real GDP rising 0.7 per cent.
Statistics Canada says it's the ninth consecutive monthly increase following record declines in March and April of 2020, but still 3 per cent below the February 2020 pre-pandemic level.
"The 0.7 per cent advance during the month, which was two ticks above expectations, was led by sectors which weren't directly affected by stay-at-home orders," said senior CIBC economist Royce Mendes.
"That strength more than offset the weakness seen in retail trade, accommodation and food services which resulted from the orders necessary to curb virus transmission."
Although overall growth was better than expected, the Canadian Chamber of Commerce said the struggles of the hardest-hit sectors should also be kept in mind.
"Accommodation and food services, retail, and transportation all saw declines in the month of January due to restrictions on physical presence," said chief economist Trevin Stratton.
"As a third wave looms, these sectors will require continued, prolonged, and targeted support to ensure they can help propel job creation going forward. For these sectors and others, nothing will have a greater impact on recovery and growth than getting the pandemic under control."
Canada's housing market fuels growth
Canadians fortunate enough to have avoided financial strain during the pandemic continue to pour money into real estate and stocks. Mortgage debt increased 7.1 per cent year-over-year and bank accounts swelled with savings. Financial investment services, funds and other financial vehicles rose 0.9 per cent.
Residential construction has been up every month since May last year, and January was no exception with a 3.1 per cent increase. It was up across all housing types.
Statistics Canada also estimates 0.5 per cent growth in February in a preliminary estimate. With that, Capital Economics' senior Canada economist Stephen Brown estimates 5 per cent first-quarter annualised growth. That's far stronger than his previous estimate of 4 per cent and a cue that quantitative easing tapering is possibly around the corner.
"With the economy doing much better than policymakers expected, it seems likely that the Bank of Canada will cut the pace of its asset purchases at its meeting in April, despite the likelihood that a third wave of the coronavirus will weigh modestly on the recovery in the next couple of months."
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.