Statistics Canada says real gross domestic product (GDP) fell 0.1 per cent in July after a 0.6 per cent rise in June.
Accommodation and food services continued to recover after lockdowns were lifted, up 12.5 per cent for the second straight monthly double-digit increase.
Reopening of places like amusement parks, gyms, and casinos helped the arts, entertainment and recreation sector rise 8.1 per cent.
But that wasn’t enough to overcome a 5.5 per cent drop in agriculture, forestry, fishing and hunting.
“While restaurants and bars were rocking again, as were businesses in the arts, entertainment and recreation sector, other parts of the economy were sagging,” said CIBC senior economist Royce Mendes.
“Heatwaves in Western Canada negatively affected crop yields, while the summer slowdown in the housing market saw residential construction down.”
Meanwhile, cooler-than-usual temperatures in central and eastern Canada led to lower demand for electricity and a 4.9 per cent decline in utilities.
Supply chain disruptions continued to weigh on manufacturing, down 1.1 per cent.
The economy from here
A preliminary estimate points to an approximate 0.7 per cent increase in real GDP for August.
BMO chief economist says for August that sectors that will benefit from reopening will contribute to growth but agriculture will likely remain weak.
“We continue to expect Q3 to print growth of around 3.5%, a tad better than the BOC's latest estimate of a chilly 2.0%. While that's not enough to alone turn the dial for policy, it reinforces the view that the Bank will take another tapering step at their policy meeting later this month (Oct 27),” said Porter.
Finally, even with the anticipated bounce in August activity, GDP in that month would still be roughly 1.2% below the pre-pandemic peak—there's still more wood to chop.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.