GDP July 2025: Positive but not promising

“The real GDP growth number for July of 0.2% being a positive number is a welcome reprieve from three months of consecutive decline, yet still not a promising signal to expect continued growth going forward. However, right around the corner, Statistics Canada’s advance estimate for August indicates zero growth. Except for retail trade, other trade-related sectors have expanded in July, supported by strong growth in actual hours worked. Though the data suggests that the economy is out of the red zone, a careful mix of monetary and expansionary fiscal policy is required to stay below the inflation target level while supporting economic growth and job creation.”

KEY TAKEAWAYS

• Real GDP edged up 0.2% in July, supported by growth in 11 of 20 sectors, led primarily by the goods-producing industry (+0.6%), while the services-producing industry was essentially flat (+0.1%).
• The mining, quarrying, and oil and gas sector rose 1.4%, with mining and quarrying up 2.6% and oil and gas extraction up 0.9%, driven by pipeline expansion and crude prices treading above pre-pandemic averages.
• Transportation and warehousing expanded 0.6% in July, rebounding from a decline in June. Growth was led by pipeline transportation (+2.8%), with crude oil (+3.3%) and natural gas (+2.3%) showing strong gains. The completion of the LNG facility in Kitimat and its first full month of operation also lifted supporting activities for transportation (+1.0%).
• Manufacturing rose 0.7% in July, partially offsetting June’s 1.5% contraction. Despite new tariffs on copper and seasonal shutdowns in assembly plants, strong gains in motor vehicle parts (+10.5%) and motor vehicle manufacturing (+9.1%) drove growth in durable-goods manufacturing (+1.0%).
• In contrast, retail trade fell 1.0%, weighing on overall growth. The negative sentiment following the Q2 GDP release persisted, reflected in weaker activity at supermarkets and retail stores.

With labour markets weakening and Statistic Canada’s advance estimate pointing to zero real GDP growth in August, Canada’s economy is expected to expand at a modest pace of around 1.7% (as per BDL Nowcast model) in the third quarter, following contraction in Q2. While growth remains subdued, the September rate cut—potentially followed by another by the end of 2025—combined with cutting red-tape and investment in large-scale projects, could help shift the economy from slow-growth to a more sustainable growth trajectory.

SUMMARY TABLE

Source: Statistics Canada

CHART

Source: Statistics Canada; Canadian Chamber of Commerce BDL