Today’s release of July’s real GDP growth of close to zero by Statistics Canada has been interpreted as Canada’s economy stalling and a portent of ominous things to come as the trade dispute with the United States worsens. However, it is only one month’s result and needs to be put in some comparative perspective.
Figure 1 plots monthly real GDP growth since January of 2024 and compared to the previous three months July does look like a precipitous drop. However, if one goes back for several years, there have been other very low growth months (March 2024, August 2024, June 2025, March 2026) not to mention several months of outright decline (November 2024, February 2025, April 2025, May 2025, October 2025, January 2026). Indeed, over the entire 1997 to 2026 period, average monthly real GDP growth has only averaged 0.2 percent with the highest being June of 2020 at 5.8 percent and the lowest April 2020 at -10.4 percent – both during the initial phases of the pandemic.
Figure 2 provides another comparison. The real GDP growth rate for July of every year since 1997 is provided along with aggregate statistics for every July as well as for all the months the entire 1997 to 2026 period. At 0.02 percent, July 2026 is effectively zero but there was negative growth in the July of 1998 2001, 2007,2017 and 2023. Of these 30 Julys, July of 2026 is near the bottom, ranked at 24th place. However, there have been six other July real GDP growth rates lower than July of 2026.
In other words, there is no point in overreacting to one month’s poor result after three months of consecutive growth. As Statistics Canada itself notes: “The goods-producing industries grouping was essentially unchanged in July as increases in construction and utilities were offset by declines in the other sectors comprising the aggregate. The services-producing industries aggregate was essentially flat, as increases across several sectors were offset by declines in retail trade and wholesale trade. Overall, 10 of 20 industrial sectors expanded in July.”
In general, summer in Canada is short and maybe more people than usual took time off and production slowed. Moreover, July of 2026 also saw wildfires peak in several parts of the country and this may also have been a factor especially when it comes to the service sector as more people remained indoors.
