**UNSPLASH/Crosby Hinze**
**GDP growth was higher than expected in July, boosted by retail sales at car dealerships, but flatlined in August, Statistics Canada reported.**

Canada’s economy grew by 0.2 per cent in July, boosted by the retail and public sectors, but likely stalled in August, according to data released Friday by the federal statistics agency.

The July number was stronger than expected, however preliminary estimates from the agency show growth probably flatlined the following month, as increases in oil and gas extraction and the public sector were offset by decreases in manufacturing and transportation and warehousing. Statistics Canada will release updated data for August GDP growth on Oct. 31.

The June reading was also flat, meaning third-quarter GDP growth is tracking “just north” of an annualized one per cent, quarter-over-quarter, “significantly” below the central bank’s 2.8 per cent projection, TD economist Marc Ercolao wrote in a commentary after the release. The tepid numbers will keep a 50 basis point rate cut in play for the Bank of Canada’s Oct. 23 meeting, after a similar-sized move by the Federal Reserve this month.

“The Bank of Canada has shifted their tone as of late, putting more emphasis on their fears around a weakening economy,” Ercolao wrote, adding today’s GDP print likely doesn’t tip the scales more or less in favour of a 50 bip rate cut next month, but rather, policy makers will be more focused on upcoming labour and inflation numbers. “The bank will be looking for signs that price growth can remain durably at two per cent.”

Friday’s report showed 13 of 20 sectors expanded in July, with retail trade contributing the most to growth, particularly motor vehicles and parts dealers.

The public sector, which comprises educational services, health care and social assistance and public administration, expanded for a seventh consecutive month.