Canada's national economic output expanded in January, although at a slower pace than the month before.
Statistics Canada says gross domestic product grew by 0.1 per cent in January after a 0.5 per cent jump the month before.
The results were in line with economist expectations.
The manufacturing sector expanded for the fifth consecutive month, growing by 0.7 per cent. The total output from the sector has grown to nearly $170 billion dollars per month from a recession low of around $147 billion.
Increases were also seen in finance and insurance, wholesale trade, tourism, and the public sector.
Pulling down growth was a contraction in the oil and gas sector. A 0.9 per cent decline in natural gas extraction offset a rise in oil production.
The home resale market also suffered in January as the output of real estate agents and brokers fell by over 3 per cent after four straight monthly increases.
The construction sector also slowed, down by 0.1 per cent in the month.
BMO economist Robert Kavcic says the report "coulda been worse" according to the title of his report, but budget cuts at all levels of government may start having an impact on growth.
"The modest January gain follows a strong handoff in December, and leaves growth on pace to clock in around 2.1 per cent in Q1, slightly ahead of the Bank of Canada’s latest 1.8% forecast," he said in the note.
"But fiscal restraint should temper activity somewhat, even though the axe won’t fall especially hard in 2012."