The Canadian economy expanded by 0.6 per cent in January from December, more than expected, on widespread growth in goods- and service-producing industries, Statistics Canada data indicated on Friday.

The increase, the seventh in the past eight months, was greater than the 0.3 per cent advance forecast by analysts in a Reuters poll. The month-on-month expansion was the biggest since the 0.6 per cent in June.

“The hits just keep on coming," said Brain DePratto, senior economist at TD Economics, in a note to clients Friday. "Although it is still early days and risks abound, signs are pointing to an economy that looks increasingly poised to shake off the setbacks of recent years.”

The strong start to the year signals that first-quarter annualized growth could exceed the 2.5 per cent that the Bank of Canada forecast in January.

"We believe that the wave of positive surprises in Canada’s economy will eventually prompt the Bank to shade its view a bit rosier (or at least less grey) – although we can’t see them moving on rates until 2018, given their steadfast view on the sustainability of the strength," Douglas Porter, chief economist at BMO Financial Group, wrote in a note to clients Friday. 

Manufacturing in January grew 1.9 per cent on strength in virtually every sector, while mining, quarrying, and oil and gas extraction also increased by 1.9 per cent.

Wholesale trade advanced by 2.4 per cent, the largest monthly gain since July 2013, on higher imports and exports of motor vehicles and parts. Retail sales grew by 1.5 per cent.

“We are seeing really the strongest economic growth in Canada now in at least five years,” Sal Guatieri, senior economist at BMO Capital Markets told BNN in an interview. “All I can say is wow in response to these numbers.”

THE HOUSING FACTOR 

Senior Canada Economist at Capital Economics David Madani is warning that with a cool down in Vancouver’s housing market, and recent signals that the Ontario government is looking at measures to cool Toronto’s market, “housing investment could soon become a drag on the entire national economy."

"For all these reasons, we still expect the Bank of Canada to remain cautious about the economic growth outlook this year,” he said in a note to clients. “But obviously that will be harder to do in light of January’s strong GDP numbers.”