OTTAWA--Canada's economy looks to have perked up again after stalling in July, setting the country up for more subdued growth as tariffs ramp up.
Gross domestic product was unchanged from the month before in July, snapping three straight months of expansion that included upwardly revised growth of 0.4% in June, Statistics Canada said Tuesday. The agency's advance data indicates output increased 0.2% in August.
The data mark a deceleration in the current quarter following the economy's strong second-quarter rebound, and comes as businesses and households face fresh uncertainty after an escalation in trade tensions between Canada and the U.S. and as the conflict in the Middle East persists.
The national data agency said early information shows a recovery in mining and retail trade in August was partially offset by further weakness in oil and gas extraction.
In a speech last week, Bank of Canada Gov. Tiff Macklem said that while the imposition of new tariffs on the equivalent of about 5% of Canadian goods imported by the U.S. likely won't have a large direct effect, the breakdown in trade negotiations between Ottawa and Washington could again cause business to delay investment and hiring decisions and retrain growth.
The central bank, which is due to update its projections in late October, has forecast the economy will grow 1.5% at annual rates in the current quarter, slowing from the 3.3% expansion in the second quarter, the fastest pace in three years.
Industry accounts for July showed little change overall for goods-producing and services industries in Canada. The flat result for the month was in line with Statistics Canada's earlier estimate, though a tick softer than the 0.1% growth economists anticipated.
Construction activity increased for a fourth consecutive month, offsetting a pullback during the final months of last year and at the start of 2026. This included growth in residential building in July, driven by a rise in home alterations and improvements as well as new construction of most dwelling types.
There also was a rebound by utilities in July that countered a contraction the month before, led by growth in electric power generation, transmission and distribution.
However, manufacturing activity retreated for the first time in four months, in part thanks to unplanned downtime at a petroleum refinery in southwestern Ontario that resulted in lower output of gasoline, diesel and aviation fuel.
July also saw declines in oil and gas extraction, excluding at oil sands mines in Western Canada which tempered the fall, and in mining as production of potash, gold and silver fell.
Retail trade decreased in July, largely offsetting an expansion the month before. Retail activity at gasoline stations and fuel vendors was down sharply, countering most of the growth a month earlier and at a time of rapidly rising gas prices during the peak summer travel season.
Wholesale trade also weakened after being one of the biggest contributors to Canada's growth in June, though some other service-producing industries expanded, including real estate, accommodation and food, and architectural, engineering and related services.
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