Canada's gross domestic product was essentially unchanged in July, as the oil and gas, mining and manufacturing industries all shrank.

Statistics Canada reported Friday that while the goods-producing sector shrank, services grew. Wholesale trade expanded by two per cent during the month, its best performance since September 2014.

July's flat showing overall is a slowdown from the recent trend, as the economy was growing at a 4.5 per cent annual pace at the end of June, the fastest pace in six years. Economists had expected the economy to eke out a small gain of around 0.1 per cent for the month.

While not an encouraging sign, July's pullback comes after a stretch of rapid growth. For the first six months of the year, Canada's economy has expanded by an average of 0.4 per cent per month, tacked on the back of 0.3 per cent average monthly growth in the back half of 2016, Bank of Montreal economist Doug Porter noted.

"We all knew the economy could not keep up that pace, and it was only a matter of time before it cooled," Porter said, "and July marks the start of that cooling."

"While we would never read too much into any one month, [July] could mark a return to a more sustainable and realistic growth rate for the economy, after a year of staggeringly good news."

RBC senior economist Nathan Janzen said the bank is sticking with its prediction of GDP growth of 2.5 per cent in the third quarter which ends Saturday, adding that pace could still justify further gradual rate hikes from the Bank of Canada.

"We suspect that the slower start to Q3 gives us the flavour of things to come, with our forecast for the back half of the year tracking half the pace seen at the start of 2017," said CIBC economist Nick Exarhos in a note.

"That's another reason why we see the Bank of Canada using a more gentle hand with tightening from here."