Canadian Monthly GDP (July 2025)

Canada's economy rebounds in July

• Canadian GDP rose by 0.2% m/m in July, partly reversing three consecutive monthly contractions. The print was a tick hotter than consensus expectations.
• Compositionally, 11 of 20 industries registered an increase on the month. Goods industries rebounded by a hefty 0.6% m/m, while the services sector nudged higher by 0.1% m/m.
• On the goods side, a 1.4% m/m gain in the mining, oil & gas sector made the biggest contribution to headline growth. A 0.7% m/m increase in the manufacturing sector also provided an assist after falling last month.  Elsewhere, the agriculture and construction sectors were up by a softer 0.1% m/m. 
• On the services side, gains in wholesale trade (0.6% m/m), transportation and warehousing (0.6% m/m) and real estate (0.3% m/m) did most of the heavy lifting. A weaker month for retail trade (-1.0% m/m) and information and cultural services (-0.6% m/m) counterbalanced some of the services side gains.
• The advanced guidance for flat growth in August GDP is the result of gains in wholesale and retail trade that are offset by a reversal in the oil & gas, manufacturing, and transportation sectors.

Key Implications

• Growth in Canada's tariff-impacted industries contributed most to July's brighter-than expected print. Stabilization across these sectors underpins our view that GDP growth in the third quarter is set to recover modestly after last quarter's trade-driven contraction. Early-tracking suggests sub-1% annualized growth in Q3, which is in line with our expectations, and a touch below the Bank of Canada's (BoC) most recent projections. 
• The BoC will take this reading in stride, as they continue to weigh the risks around inflation and growth. Looking forward, we maintain our view that the BoC has room to cut rates again in the fourth quarter. The growth backdrop is expected to gradually recover over the next couple quarters, but economic slack will persist. What's more, the outlook continues to face considerable uncertainty, not least as Canada and the U.S. soon enter USMCA renegotiations.            

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