RBC Says Q3 GDP Tracking Broadly In Line With Its Own Forecast After Today's Data

10:33 AM EDT, 09/26/2025 (MT Newswires) -- For RBC Economics, the bottom line is that the 0,2% increase in July GDP was slightly above Statistics Canada's 0.1% advance estimate a month ago and broadly confirmed earlier signs that the Canadian economy steadied early in Q3 after contracting in the immediate wake of aggressive U.S. tariffs imposed globally in Q2.

RBC noted production in the heavily trade-exposed manufacturing sector rose 0.7% after posting its largest production decline in Q2 (outside of pandemic lockdowns) since the 2008-09 recession. And mining output rebounded 1.4% as production bounced back in part from wildfire related disruptions in Q2.

Industries targeted directly with tariffs remained under pressure, RBC noted, with iron and steel manufacturing falling another 19% in July, to 29% below year ago levels, coinciding with a hike in the U.S. tariff rate on steel products to 50% beginning in June.

Also, RBC noted, an earlier advance manufacturing sales report for August reversed more than half of the July increase, and the early wholesale sales report for August released separately this morning showed a 1.3% decline.

But 88% of Canadian exports were still crossing the U.S. border duty free under an exemption from tariffs for CUSMA compliant trade in July. Export volumes ticked higher overall in July and consumer spending has remained resilient to-date.

RBC said the advance estimate of August GDP was "essentially unchanged", showing a slow but positive growth rather than a repeat of the Q2 contraction. The Bottom Line

The 0,2% increase in July GDP was slightly above Statistics Canada's 0.1% advance estimate a month ago and broadly confirmed earlier signs that the Canadian economy steadied early in Q3 after contracting in the immediate wake of aggressive U.S. tariffs imposed globally in Q2.

Production in the heavily trade-exposed manufacturing sector rose 0.7% after posting its largest production decline in Q2 (outside of pandemic lockdowns) since the 2008/09 recession. And mining output rebounded 1.4% as production bounced back in part from wildfire related disruptions in Q2.

Industries targeted directly with tariffs remained under pressure -- iron and steel manufacturing fell another 19% in July, to 29% below year ago levels, coinciding with a hike in the U.S. tariff rate on steel products to 50% beginning in June.

An earlier advance manufacturing sales report for August reversed more than half of the July increase, and the early wholesale sales report for August released separately this morning showed a 1.3% decline.

But 88% of Canadian exports were still crossing the U.S. border duty free under an exemption from tariffs for CUSMA compliant trade in July. Export volumes ticked higher overall in July and consumer spending has remained resilient to-date.

RBC noted the advance estimate of August GDP was "essentially unchanged", showing "slow but positive" growth rather than a repeat of the Q2 contraction. It said those estimates have been exceptionally revision prone, but would leave overall GDP growth tracking broadly in line with its own forecast for a 0.5% (annualized rate) increase in GDP in Q3.

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