Boosted by unexpected strength in the manufacturing sector, Canada’s economy grew by 0.2 per cent in July, Statistics Canada reported Friday.

The moderate gain, which surprised economists who were expecting an increase of 0.1 per cent, followed an essentially flat reading in June, and came in spite of a drag from lower oil production.

This increase was concentrated as 12 of 20 sectors were up, led by growth in manufacturing, wholesale trade, utilities and transportation and warehousing, the data agency said.

Main industrial sectors’ contribution to the percent change in gross domestic product in July. Source: Statistics Canada

The upside surprise to growth in July was from a solid 1.2 per cent rise in manufacturing, said BMO Financial Group chief economist Douglas Porter.

This not only followed a 0.8-per-cent advance in June, but it came just as the metals tariffs battle with the U.S. was heating up a notch with Canada’s retaliatory tariffs kicking in in July, Porter said.

The transportation sector posted a 0.9-per-cent growth and while wholesale trade grew by 1.4 per cent.

July was also a big month for utilities, which jumped 2.1 per cent as Canadians in many parts of the country turned on their air conditioning to escape the blazing heat.

“On balance, the Canadian economy looks to have had a wee bit more underlying momentum than expected through the summer, and the ding from the Syncrude outage was not as deep as feared,” Porter said in a note to clients.

The ducks are in a row for another interest rate hike by the Bank of Canada in October, barring a complete meltdown in renegotiation of the North American Free Trade Agreement, Porter said.