Canada's Economy Stalls in July, Trade Friction Looms

Royal Bank of Canada's research arm, RBC Economics, is predicting that Canada's economy stalled in July. According to their forecast, monthly growth will be flat after a strong spring season.

The bank cited softer signs from manufacturing, wholesale, and retail activity as the reason for this prediction. However, they noted that oil and natural gas production remained roughly unchanged, while real estate-related activity provided some offset through a housing rebound.

A flat July would put 'downside risk' on RBC's 1.8% annualized growth forecast for the third quarter. If the quarter starts slow, later months will have to work harder to meet this pace.

The release of Tuesday's report also includes an early estimate for August, which RBC highlighted as the first broad activity snapshot after the US imposed 50% tariffs on about 5% of Canadian imports. A weak preliminary number for August would hint that trade friction is starting to affect day-to-day economic output.