A widespread decline in retail trade held back Canada’s economic growth in July, as real gross domestic product rose 0.2 per cent, following a 0.1 per cent decline in June, Statistics Canada said Friday.
The retail sector contracted 1.0 per cent in July, offsetting some of the gains made across goods-producing and service industries. The agency reported broad-based declines, with 8 of 12 subsectors posting losses.
“After leading the growth in June, food and beverage stores (-2.0%) was one of the largest contributors to the decrease in July,” Statistics Canada said, attributing the drop largely to weaker activity at supermarkets and other grocery retailers.
Other significant declines came from clothing and clothing accessories stores (-3.4 per cent), sporting goods, hobby, book and music stores (-8.2 per cent), and building material and garden equipment and supplies dealers (-1.5 per cent), which all saw pullbacks after gains the previous month. However, non-store retailers — which include online sales — rose 2.4 per cent, softening the overall decline.
Despite the drag from retail, the overall economy grew, marking the first monthly GDP increase in four months, driven mainly by a rebound in goods-producing industries, which expanded 0.6 per cent after three consecutive months of contraction. Services-producing industries edged up 0.1 per cent. In total, 11 of 20 industrial sectors posted gains in July.
The mining, quarrying, and oil and gas extraction sector led growth with a 1.4 per cent increase. Metal ore mining rose 2.6 per cent, contributing to a 2.6 per cent gain in the broader mining and quarrying category (excluding oil and gas). The oil and gas extraction subsector expanded 0.9 per cent, supported by a 1.2 per cent rise in oil sands extraction as production ramped up following spring maintenance work. Oil and gas extraction outside the oil sands grew 0.6 per cent, reflecting higher output of natural gas and crude petroleum.
Transportation and warehousing increased by 0.6 per cent in July, recovering from a 0.7 per cent decline in June. Pipeline transportation (+2.8 per cent) posted its strongest growth since September 2022, driven by gains in crude oil and other pipeline transportation (+3.3 per cent) and natural gas pipelines (+2.3 per cent), in line with higher exports.
Support activities for transportation rose 1.0 per cent, the largest gain since April 2024. Statistics Canada noted this increase “reflects in part the higher activity at the LNG Canada facility in Kitimat, which completed its first full month of operations in July.” Rail transportation also grew by 1.1 per cent.
The manufacturing sector expanded 0.7 per cent, partly reversing a 1.5 per cent decline in June. Durable goods manufacturing rose 1.0 per cent, led by transportation equipment manufacturing (+3.2 per cent). Motor vehicle parts manufacturing surged 10.5 per cent, while motor vehicle manufacturing climbed 9.1 per cent. Statistics Canada noted that planned summer shutdowns at Ontario assembly plants were less pronounced this year “due to the continued production slowdown, influenced by factors such as the new tariffs imposed by the United States.”
Primary metal manufacturing, however, fell 5.5 per cent, dampening growth in the sector. Iron and steel mills and ferro-alloy manufacturing dropped 19.1 per cent — the sharpest monthly decline since April 2020 — as U.S. tariffs on Canadian steel imports doubled to 50 per cent in early June.
Non-durable goods manufacturing rose 0.4 per cent, with chemical manufacturing up 4.8 per cent. “Pharmaceutical and medicine manufacturing expanded 12.6% in the month, offsetting most of the decline recorded in June,” the agency said.
Wholesale trade increased 0.6 per cent, marking the third consecutive monthly gain. Motor vehicle and parts wholesalers led the sector (+5.4 per cent), in line with rising production and exports. Building material and supplies wholesalers grew 2.5 per cent, driven by lumber and millwork.
Real estate and rental and leasing rose 0.3 per cent in July, reaching a new record high for the second month in a row. “Growth in July was driven in large part by higher activity at the offices of real estate agents and brokers and activities related to real estate (+3.6%),” Statistics Canada said. The increase reflected stronger home resales, particularly in large markets in Ontario and British Columbia. Legal services, which are closely tied to real estate transactions, grew 0.5 per cent.
Looking ahead, advance data suggest that real GDP was essentially unchanged in August. Gains in wholesale and retail trade were offset by declines in mining, manufacturing, and transportation. These preliminary figures will be updated on Oct. 31, when official August data are released.
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