New data from Statistics Canada shows that the economy was on a modest upswing in the early part of the summer, giving hope that the country may avoid a second recession.
During the month of July, real gross domestic product increased by 0.3 per cent, an improvement which StatsCan said was powered by the manufacturing, wholesale trade and the transportation and warehousing sectors.
StatsCan said growth in manufacturing was "broadly based," with the sector seeing a 1.4 per cent boost after three consecutive monthly declines.
BNN's Michael Kane said the fact that the manufacturing sector was the leader in July was particularly good news for the economy.
"That's something that we really want to see to keep the engine of the Canadian economy going," Kane said on Friday morning.
Wholesale trade was up 1.5 per cent in July, while retail trade was down 0.7 per cent.
Transportation and warehousing services grew 1.8 per cent, which StatsCan said was largely related to the resumption of federal postal services after a weeks-long strike disrupted mail delivery operations for most of June.
Hot summer weather during the month of July had Canadians turning on the air conditioning, which StatsCan said contributed to a 1.5 per cent increase in the output of utilities.
Construction was down 0.3 per cent in July and Canadians bought fewer homes on the resale market. The finance and insurance sectors also decreased 0.3 per cent in July, as mutual fund sales and the volume of stock exchange trading dropped.
Mining, oil and gas extraction fell 0.3 per cent, as production for natural gas dipped.
Douglas Porter of BMO Capital Markets said most of the StatsCan data collected in July came before world markets started tossing and turning towards the end of the same month.
But he said the growth seen in July indicated that the economy has some gas in the tank.
"While this report largely predates the onset of serious financial market turbulence -- which began in earnest in late July -- it does suggest the Canadian economy had some decent momentum heading into the turmoil," Porter said in a note to clients on Friday.
Emanuella Enenajor of CIBC World Markets said the July growth may have been small, but its presence was significant in the face of an expected slowdown in the months ahead.
"Overall, a healthy gain -- although recent indicators suggest some potential deceleration in the following months, which should leave third-quarter GDP at around two per cent annualized," Enenajor wrote on Friday.
Economists will be watching the forthcoming GDP figures in August and September closely.
If the economy posts cumulative growth from the July-September period, it will mean that Canada has avoided posting two consecutive quarters of decline, an event that is typically referred to as a recession.
With files from The Canadian Press
