Canadian Economy Pauses Amid Tariffs and Construction Growth

Canada's economy experienced no growth in July after averaging 0.5% monthly gains between April and June, according to new data from Statistics Canada. Weaknesses were seen in manufacturing, wholesale, and retail trade sectors, but construction activity rose by 1.3%, one of the largest contributors to overall growth.

Despite this pause in growth, RBC economist Abbey Xu believes that the economy remains on track for a third-quarter gain. Statistics Canada's advance estimate indicated a 0.2% GDP increase in August, consistent with RBC's own forecast of 1.8% for Q3.

The new tariffs imposed by the US on Canadian exports are expected to cause significant disruption, but rising hours worked and resilient consumer spending suggest that other areas of the economy continued to expand.