Desjardins Says July GDP Beat Looks Fleeting as StatCan Flash Points to August Stall

09:31 AM EDT, 09/26/2025 (MT Newswires) -- Canadian GDP rose 0.2% in July, a touch above forecasts on goods-sector strength, but Desjardins' Tiago Figueiredo says the momentum is fading with a flash estimate showing August stalled and Q3 growth tracking near 0.5%, reinforcing his view of a 2.00% policy-rate trough.

Canadian GDP rose more than expected in July, but that "strength appeared to be fleeting", Figueiredo said Friday.

Figueiredo noted the 0.2% increase in July growth topped consensus estimates by 1 tick with most of that strength coming from the goods producing sector which rose 0.6% over the month. He also noted a partial rebound in manufacturing and an increase in oil & gas extraction were the main drivers of growth over the month.

Services rose 0.1% over the month, pulled down by a contraction in retail trade but real estate posted another strong increase, rising by 0.3% for three consecutive months now. Still, Figueiredo noted, weakness appears broad-based with only 45% of industries growing over the past three months. That's well below the historical average of roughly 60%.

According to Statistics Canada's flash estimate, GDP growth stalled in August. Increases in wholesale and retail trade were offset by decreases in the energy, manufacturing and transportation sectors. Overall, Desjardins continues to see positive GDP growth in the third quarter with its latest tracking settling around 0.5%.

However, Figueiredo said there are plenty of headwinds to the Canadian economy and Desjardins remains comfortable holding the view that central bankers lower their policy rate to a trough of 2.00%.

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