By Robb M. Stewart
OTTAWA--Canada's manufacturers and wholesalers look to be steadying after taking a hit this year from trade uncertainty and higher tariffs, with early estimates of sales suggesting a tailwind for a sluggish economy entering the third quarter.
An advance tally of manufacturing sales points to a solid 1.8% improvement in trade in July from a month prior, while wholesale sales are estimated to have risen 1.3% for the month, data released Tuesday by Statistics Canada showed.
The advance in factory sales was led by improved trade in transportation equipment, as well as in petroleum and coal, the data agency said. The improvement for the wholesale industry reflected higher sales by the motor vehicle and parts and accessories industry.
Trade-exposed sectors of Canada's economy have faced the brunt of the fallout from the abrupt shift in the U.S. approach to trade and frequently changing import tariffs, though there have been some signs of stability returning and recent polls indicate business and household confidence is improving from record lows in the spring.
Factory sales rose 0.3% in June following four consecutive months of declines, led higher by trade in petroleum and food products, Statistics Canada reported earlier this month. Over the second quarter of the year, sales slumped 4.6%, the largest quarterly drop since the same period of 2020.
Wholesalers--the largest component of Canada's services sector--saw a 0.7% rise in sales between May and June, the first increase in four months, thanks to activity in the food sector, and the mineral, ore and precious metals industries. For the second quarter of the year, wholesale sales were down 1.7%.
Statistics Canada is set to release an estimate of industry-level gross domestic product for July at the end of the week, alongside GDP data for June and the second quarter. The agency last month forecast GDP edged up 0.1% from the month before in June after falling 0.1% in both May and April. Economists anticipate an annualized contraction of 0.7% for the second quarter, a sharp slowdown for the economy after stronger-than-expected growth of 2.2% in the first three months of 2025.
The changes in U.S. trade policies have created heightened economic uncertainty that is affecting both the U.S. and Canada.
Bank of Montreal in its quarterly report to shareholders on Tuesday said that uncertainty and reciprocal tariffs will likely cause the global economy to weaken this year, though recent U.S. trade agreements with several regions including the European Union and Japan mark some progress toward stabilizing the economic environment. It forecast a modest contraction in Canada's economy in the second quarter due to weakness in exports and business investment, with real GDP growth averaging 1.3% for the year and 1.4% in 2026, versus the 1.6% expansion in 2024.
S&P Global's monthly manufacturing purchasing managers' survey found a modest improvement for July, though its headline index remained in contraction territory for a sixth straight month as trade with the U.S. remained challenging. Output, new orders and buying activity continued to weaken, though the pace of the decline has slowed.
Statistics Canada's sales projection for July was based on a weighted response rate to its monthly survey of roughly 70% and the wholesale estimate on a response rate of about 64%. Official sales data for both indicators is scheduled to be released Sept. 15.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
08-26-25 1000ET
