Canada’s Economy Stalls in July, August Seen Rebounding 0.2%

• Canada’s economy was unchanged in July 2026, in line with expectations and signalling a slower start to Q3 after three consecutive months of growth. The flat reading came just before a new set of US tariffs took effect in August.
• Activity in both goods-producing and services-producing industries was largely unchanged. Manufacturing declined 0.9%, its first decrease in four months, led by a 6.2% drop in petroleum refinery activity. Mining, quarrying and oil and gas extraction also fell 0.5% for a second consecutive month.
• The declines were largely offset by gains in utilities, which rose 1.7%, and construction, up 1.3%. Construction expanded for a fourth consecutive month.
• Among ​the services-producing industries, retail trade contracted 1.0% and wholesale trade declined 0.4%. Professional, scientific and technical services increased 0.3%, while real estate, rental and leasing rose 0.2%, with real estate expanding for a sixth consecutive month.
• Statistics Canada’s preliminary estimate points to a 0.2% increase in real GDP in August, supported mainly by higher output in mining and retail trade. The Bank of Canada currently forecasts 1.5% annualised growth in Q3 2026.
• Canada’s economy lost momentum at the start of Q3, with activity stalling in July after three consecutive monthly gains. While the preliminary August estimate points to a 0.2% rebound, the impact of new US tariffs remains a key downside risk to the outlook.

(Source: Reuters)