Analysts at Royal Bank of Canada (RBC) believe that ongoing trade concerns should continue to take the shine off of what otherwise has looked like relatively solid economic data.

• “The end-of-month Q2 GDP report should confirm the economy performed reasonably well in the second quarter. Data to-date supports our forecast that GDP growth rebounded in Q2. We are looking for a 3% gain, a marked improvement following subpar growth of less than half a percent in each of the two prior quarters.
• A big chunk of the rebound in Q2 came from the oil & gas sector as earlier stresses (low global oil price benchmarks, wide Canadian price spreads, and mandated Alberta production cuts) eased. Activity outside of oil & gas production also picked up.
• Residential investment probably increased for the first time in six quarters with housing markets finding a near-term bottom in the spring. But business investment will still be a soft spot in Q2 with trade uncertainty dampening sentiment. And a big export-led surge in the often-volatile net trade balance will bump up the growth rate in the quarter but clearly looks unlikely to be repeated given rising global trade tensions.”