| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | 0.1% | 0.1% to 0.2% | 0.2% | -0.1% |
| Year over Year | 0.9% | 0.9% |
Highlights
Canada GDP recovered 0.2 percent in July, more than expected by forecasters in an Econoday survey who had anticipated a monthly growth rate of 0.1 percent after a 0.1 percent contraction in June.
The advance estimate for August points to a stable activity with increases in wholesale and retail trade offset by decreases in oil and gas extraction, manufacturing, and transportation and warehousing.
Should the August stabilization materialize, it would set GDP growth on the path to a pick up in the second half of the year as expected by the Bank of Canada under a scenario where retaliatory tariffs by Canada and China remain permanent, while other countries do not retaliate. Under this scenario, GDP is seen picking up 1.0 percent in the second half of 2025 according to the July Monetary Policy Report. However, the central bank's view has shifted since the July MPR, including a labor market that has softened more than it had expected, a key argument behind September's rate cut, which suggests a possible downgrade to the growth outlook for the rest of this year.
In its latest fiscal outlook published September 25, the Parliamentary Budget Officer (PBO) projects that real GDP growth in 2025 will be 1.2 percent, a downgrade from the 1.7 percent projected in March. The PBO expects growth to remain subdued through the second half of 2025. This weaker forecast is attributed to persistent trade tensions, the lasting impact of trade policies, and increased trade uncertainty and the implementation of tariffs.
In July, goods-producing industries rebounded 0.6 percent following three consecutive months of contraction, and services were up 0.1 percent for the second consecutive month.
The mining, quarrying, and oil and gas extraction sector expanded 1.4 percent over the month, when overall energy activity grew 1.1 percent. All other major goods-producing industries also increased in July, including a 0.7 percent advance in manufacturing, with durables up 1.0 percent and nondurables up 0.4 percent. Industrial production rebounded 0.9 percent on the month, more than recovering June's 0.8 percent decline.
Within services, the picture was more mixed. On the upside, transportation and warehousing was up 0.6 percent after contracting 0.7 percent in June, led by a 2.8 percent gain in pipeline transportation, the largest since September 2022. Wholesale trade also contributed with a 0.6 percent expansion, the same as in June. Real estate and rental and leasing expanded 0.3 percent to reach a record high, marking the fourth consecutive monthly increase. Elsewhere, public administration was up 0.3 percent and public sector activity up 0.2 percent.
By contrast, retail trade retreated 1.0 percent after rebounding 1.5 percent in June, one of seven services sectors to contract over the month. The central bank expects that slow population growth and the weakness in the labor market will likely weigh on household spending in the months ahead.
The advance estimate for August points to a stable activity with increases in wholesale and retail trade offset by decreases in oil and gas extraction, manufacturing, and transportation and warehousing.
Should the August stabilization materialize, it would set GDP growth on the path to a pick up in the second half of the year as expected by the Bank of Canada under a scenario where retaliatory tariffs by Canada and China remain permanent, while other countries do not retaliate. Under this scenario, GDP is seen picking up 1.0 percent in the second half of 2025 according to the July Monetary Policy Report. However, the central bank's view has shifted since the July MPR, including a labor market that has softened more than it had expected, a key argument behind September's rate cut, which suggests a possible downgrade to the growth outlook for the rest of this year.
In its latest fiscal outlook published September 25, the Parliamentary Budget Officer (PBO) projects that real GDP growth in 2025 will be 1.2 percent, a downgrade from the 1.7 percent projected in March. The PBO expects growth to remain subdued through the second half of 2025. This weaker forecast is attributed to persistent trade tensions, the lasting impact of trade policies, and increased trade uncertainty and the implementation of tariffs.
In July, goods-producing industries rebounded 0.6 percent following three consecutive months of contraction, and services were up 0.1 percent for the second consecutive month.
The mining, quarrying, and oil and gas extraction sector expanded 1.4 percent over the month, when overall energy activity grew 1.1 percent. All other major goods-producing industries also increased in July, including a 0.7 percent advance in manufacturing, with durables up 1.0 percent and nondurables up 0.4 percent. Industrial production rebounded 0.9 percent on the month, more than recovering June's 0.8 percent decline.
Within services, the picture was more mixed. On the upside, transportation and warehousing was up 0.6 percent after contracting 0.7 percent in June, led by a 2.8 percent gain in pipeline transportation, the largest since September 2022. Wholesale trade also contributed with a 0.6 percent expansion, the same as in June. Real estate and rental and leasing expanded 0.3 percent to reach a record high, marking the fourth consecutive monthly increase. Elsewhere, public administration was up 0.3 percent and public sector activity up 0.2 percent.
By contrast, retail trade retreated 1.0 percent after rebounding 1.5 percent in June, one of seven services sectors to contract over the month. The central bank expects that slow population growth and the weakness in the labor market will likely weigh on household spending in the months ahead.
Market Consensus Before Announcement
The consensus agrees with the Stats Canada preliminary estimate that sees GDP up 0.1 percent on the month.
Definition
Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. In contrast to most industrialised countries a monthly estimate is provided derived from the value added by labour and capital in transforming inputs purchased from other producers into that industry's output. Data for the reference month are usually released close to the end of the second month after the reference period.
Description
Instead of producing an advanced quarterly GDP figure and revising it the following two months, Statistics Canada releases monthly estimates of real GDP at Basic Prices. This release breaks down real output by seven goods-producing industries and twelve service-producing industries, and includes special aggregations such as business sector, non-business sector, and industrial production.
The sources of data used for monthly and quarterly estimates often differ and leads to very different estimates for certain items, such as price deflators. As a result, the monthly figures are not perfectly correlated with the quarterly numbers. However, the monthly data do give some idea of where the quarter is headed and especially in an uncertain environment, they are closely watched. While industrial production is closely watched in the U.S., it is not in Canada especially since the economy has become increasingly dominated by services. However, the goods sector is more vulnerable to wide swings in output compared to services, and exports remain dominated by industrial output.
The sources of data used for monthly and quarterly estimates often differ and leads to very different estimates for certain items, such as price deflators. As a result, the monthly figures are not perfectly correlated with the quarterly numbers. However, the monthly data do give some idea of where the quarter is headed and especially in an uncertain environment, they are closely watched. While industrial production is closely watched in the U.S., it is not in Canada especially since the economy has become increasingly dominated by services. However, the goods sector is more vulnerable to wide swings in output compared to services, and exports remain dominated by industrial output.
