Economic growth in Canada has been disappointing in the first half of the year. This morning's release of May 2015 real GDP by industry helped to firm up this view. And it is this below-expectations performance of the Canadian economy that led the Bank of Canada to cut the overnight rate by 25 basis points in July - the second rate cut this year, says TD Economics.

The weakness has been largely associated with the sharp drop in oil prices that took place during the second half of 2014 and into 2015. However, looking at the monthly GDP by industry data suggests that the weakness is more widespread. Output in mining and energy, manufacturing and construction sectors contracted during the first half of the year, along with several key services industries, including wholesale trade, transportation and warehousing and accommodation and food services

That said, despite a rough start to the year, the outlook for the Canadian economy over the second half of this year and in 2016 is much brighter, with average growth expected to head back toward the 2% mark. It is believed, economic growth on a real GDP by industry basis, will rise by roughly 1.3% (annualized) during, the second half of the year and average 2.2% in 2016. The manufacturing and export-related industries will get a lift from an uptick in economic activity in the U.S. and the lower loonie, while the domestic sector will also chip in thanks to extremely accommodative monetary policy, notes TD Economics.