Canada's economy shrank by 0.1 per cent in August as declines in oil and gas and manufacturing more than offset small gains in a majority of other industries.

Statistics Canada reported Tuesday that goods-producing industries contracted for the second consecutive month, declining 0.7 per cent.

Manufacturing was a particular soft spot, with chemial manufacturing posting its biggest one month decline in 20 years, and other types of manufacturing being down because of planned maintenance shutdowns.

"The run of amazing Canadian economic data is officially over, with growth coming back to reality in hurry," Bank of Montreal economist Doug Porter said.

The Canadian dollar lost about half a cent in reaction to the news, before recovering a little. Mid-morning, the loonie was changing hands at 77.56 cents US.

Oil and gas was down for the third month in a row. "This was largely attributable to declines in [conventional] oil and gas extraction resulting from maintenance shutdowns in Newfoundland and Labrador," TD Bank economist Brian DePratto said.

The service sector, meanwhile, eked out a small gain of 0.1 per cent. Canada's service sector has now expanded for 17 months in a row.

It was the first monthly contraction for the economy overall since October 2016.