Canadian economic activity slipped 0.1% in January as cold temperatures put a chill on wholesale trade, manufacturing and transportation.

The decline, which followed consecutive increases of 0.5% in December and 0.2% in November, caught analysts by surprise. The consensus expectation was for a 0.2% rise. January’s drop leaves GDP up just 1.6% from year-ago levels and, according to reports, suggests growth for all of Q1 will fall short of the key 3% benchmark, which the Bank of Canada projects for the first half of the year and regards as potential growth.

Statistics Canada said the monthly decline was driven by a 3.4% drop in wholesale trade (on weak exports, reported last week), a 0.7% drop in manufacturing, and a 0.8% setback in transportation. The latter two were both well below expectations, said Sherry Cooper, chief economist at BMO Nesbitt Burns Inc. Overall industrial production was down 0.4%, despite a 4.1% rise in utilities (boosted by the cold weather) vs a 0.8% rise in U.S. industrial production in the same month.

Statscan said the extremely cold temperatures across the country provided a windfall to the utilities sector. “Shopping centres enjoyed a brisk month as strong sales were reported by department stores, pharmacies, clothing and food stores,” the agency said. “The finance sector continued to enjoy gains from the recovery in North American stock markets. In addition, higher output was reported by the health, education and government administration sectors.” The result was a 1% rise in retail trade and a 0.4% rise in financial services output.

The cold temperatures across Canada also provided a boon for the utilities sector. Electricity generation rose 3.7% while natural gas distribution jumped 8.5%. Electric power consumption records were set in a number of provinces in January. An arctic cold front settled in across the country and prompted calls from utilities for consumers to cut back on power usage. Electricity generation capacity was expanded as mothballed generators were put back in use in British Columbia and nuclear capacity in Ontario was restarted.

But there were plenty of signs that the unusually cold weather in the month temporarily depressed output in other areas — construction was down 0.4%, and oil production and drilling were both very soft. Home buying activity and travel were also constrained by the harsh weather.

Cooper said the January report “should all but eliminate any remaining doubt on the Bank of Canada’s decision for April 13 — a 25 basis point rate cut looks almost certain now. However, some of the decline in GDP is likely to prove temporary (on harsh weather), so this report does not say much about what the Bank will do after April. We continue to expect that the April cut will be the last move by the Bank.”