Canadian Economy Stalls in July, Oil Output Remains Steady

Canada's economic growth appears to have stalled in July, following stronger monthly gains in real gross domestic product from April to June that averaged 0.4%. The country's manufacturing, wholesale, and retail sales data all point to declines in shipments, although manufacturing GDP was likely near flat as weakness was concentrated in petroleum and auto.

The oil and gas output likely held steady as rising non-conventional extraction in Alberta offset lower drilling. Housing rebounded in July, supporting another increase in real estate and rental services GDP, though momentum likely waned in August due to rising trade tensions that dampened buyer confidence.

A preliminary take of August's GDP should reveal how the economy fared, as trade talks with the United States collapsed, and the U.S. imposed 50% tariffs on 5% of imports from Canada on Aug. 22. The Bank of Canada is watching growth data closely ahead of its October interest rate decision.