Statistics Canada flags an August rebound as construction and utilities hold the line
Canada's real gross domestic product was essentially unchanged in July, with 10 of 20 industrial sectors expanding.
Statistics Canada published the figure on Tuesday, alongside an advance estimate pointing to growth of 0.2 percent in August.
Construction rose 1.3 percent and utilities 1.7 percent, offset by a 0.9 percent decline in manufacturing and a 0.5 percent decline in mining, quarrying and oil and gas extraction.
Retail trade fell 1.0 percent and wholesale trade 0.4 percent, while professional, scientific and technical services rose 0.3 percent and real estate, rental and leasing gained 0.2 percent.
Deloitte Canada's fall economic outlook, released the same day, forecasts real GDP growth of 0.9 percent in 2026 and 1.6 percent in 2027, raising the 2026 projection by 0.2 percentage points and cutting 2027 by 0.4 percentage points.
CBC News reported the 2027 figure as 20 percent below the 2 percent growth Deloitte forecast in late June.
The outlook ties the downgrade to the economy adjusting to the initial US Section 338 tariffs and Canadian retaliation.
The US enacted those tariffs on August 22, and Canada applied a reciprocal tranche on US exports on September 8.
Deloitte states that its projection excludes the tariff scope expanded on September 15 and the US ban on certain Canadian goods effective Tuesday.
"It's so uncertain when we think about all the factors the Canadian companies are facing, whether it's the prospect of higher costs, the prospect of more friction with our largest trading partner or perhaps even higher interest rates," Dawn Desjardins, chief economist at Deloitte Canada, told CBC News.
The outlook names business non-residential investment as the most prominent weak spot in the economy, a finding the Financial Post also reported.
Reuters quoted a note from Benjamin Reitzes, Canadian rates and macro strategist at BMO Capital Markets, saying the Canadian economy "continues to hang in there" despite trade headwinds.
BNN Bloomberg reported that Reitzes is tracking third-quarter growth of 1.5 to 2 percent, against the Bank of Canada's forecast of 1.5 percent.
Abbey Xu, an economist with RBC Economics, told the Financial Post that RBC is forecasting 1.8 percent annualized third-quarter growth and that part of July's decline appears temporary.
"We need to see persistent weakness for a few months before calling it a broader deteriorating economy," Xu said.
Jasleen Kaur Trehan, economist at the Business Data Lab and the Canadian Chamber of Commerce, put third-quarter growth on track for around 2 percent annualized in an email to Wealth Professional.
"The encouraging signal is that July may prove to have been a pause, rather than the start of a more sustained slowdown," Trehan wrote.
The Bank of Canada has held its benchmark rate at 2.25 percent for nearly a year, BNN Bloomberg reported.
Deputy governor Toni Gravelle, speaking in New York City on Tuesday, said the bank faces a "true dilemma" balancing the energy price shock against the escalating US trade dispute, the same oulet reported.
Odds of an October hike stood at 53 percent that afternoon, BNN Bloomberg reported, citing LSEG Data & Analytics.
September jobs data is due October 9, and inflation data on October 19.
The Canadian dollar traded nearly unchanged at 1.4175 per US dollar, or 70.55 US cents, Reuters reported.
