Deloitte trims 2027 GDP forecast after July’s flat GDP, Statistics Canada signals August bounce

# Snapshot Canada's real GDP was essentially unchanged in July. Growth in construction and utilities offset declines across several other sectors. Statistics Canada published the monthly figures along with an advance estimate that points to 0.2% growth in August.

# What moved the numbers Ten of 20 industrial sectors expanded in July while 10 contracted. The largest contributors to the monthly balance were:

• Construction: +1.3%.
• Utilities: +1.7%.
• Manufacturing: -0.9%.
• Retail trade: -1.0%.
• Mining, quarrying and oil and gas extraction: -0.5%.

Professional, scientific and technical services rose 0.3%, and real estate, rental and leasing gained 0.2%.

# Deloitte's revised outlook Deloitte Canada released its fall economic outlook the same day the GDP report was published. Key changes:

• 2027 real GDP forecast cut to 1.6% (down 0.4 percentage points).

Deloitte links the downgrade to the economy adjusting to US Section 338 tariffs and Canada's reciprocal measures. The firm's projection excludes tariff measures that expanded after early September and an additional US ban on certain Canadian goods that took effect later.

# How economists interpret July's pause Market and in-house economists offered varied takes:

• Benjamin Reitzes (BMO) said the economy "continues to hang in there," tracking third-quarter growth in a 1.5–2% range.
• RBC's Abbey Xu forecasts about 1.8% annualized third-quarter growth and sees part of July's decline as temporary.
• Jasleen Kaur Trehan (Business Data Lab / Canadian Chamber of Commerce) sees third-quarter growth near 2% annualized and calls July a potential pause rather than a sustained slowdown.

# Policy context and near-term data

Upcoming data points that could influence policy and outlook: September jobs data (due October 9) and inflation data (due October 19).

# Market reaction

# Bottom line July's flat GDP reflects a split economy: strong activity in construction and utilities offset declines in manufacturing, retail and resource extraction. Deloitte revised its near-term view by upgrading 2026 modestly and lowering 2027, citing trade disruptions and uncertain investment conditions. Short-term indicators and revisions suggest the July pause could be temporary, but upcoming jobs and inflation data will be important for assessing momentum and monetary policy direction.