Canada's Economy Flatlines in July Amid Manufacturing Decline

Canada's economy hit a snag in July as output flatlined, with manufacturing taking a significant hit. Statistics Canada reported that overall growth was stagnant, while goods-producing industries and services remained largely unchanged.

The decline in manufacturing was driven by a steep drop in activity at petroleum refineries and mining and oil and gas operations. However, other sectors such as utilities and construction showed resilience, with retail and wholesale trade cooling off after a strong June.

Looking ahead to August, Statistics Canada's early read suggests a 0.2% rebound, which aligns with the Bank of Canada's growth forecast for the quarter. This development may impact market expectations of a rate hike in December, with investors adjusting their bets on near-term tightening.