Canada's real gross domestic product showed a strong rebound in July, rising 0.6 per cent after a 0.5 per cent decline in June, Statistics Canada reported Monday.

Production of goods rose 1.2 per cent, with construction, manufacturing, mining and oil and gas extraction all increasing.

Utilities and the agriculture and forestry sector declined but service industries were on the rise in July.

"Notable gains were recorded in wholesale and retail trade, the finance and insurance sector, and the arts and entertainment sector," Statistics Canada said. 

Construction recovers from Quebec strike

The construction sector began to show signs of recovery in July after suffering  a 2.1 per cent decline in June on account of the labour dispute in Quebec. The sector rose 1.9 per cent, with non-residential building construction increasing by an impressive 9.2 per cent.

A strong housing market pushed the output of real estate agents and brokers up  0.8 per cent.

Manufacturing output showed an increase of 1.1 per cent after a drop of almost that much in June.

Expansion in the potash and coal mining sector also led to strong results in mining and quarrying, which was up 3.5 per cent. A rise in drilling and rigging meant activities that support the mining and oil and gas extraction showed an overall increase of 4.7 per cent in July

Oil and gas extraction itself saw a slight uptick of 0.2 per cent as extraction of crude petroleum increased but natural gas output was on the decline.

GDP rise not enough to boost growth

July's GDP bump, which was one of the biggest in two years and among the strongest since the recession, was one-tenth of a point better than the expectations of economists and set up the economy for a stronger third quarter.

But analysts noted the acceleration is also unlikely to be sustained. Nor is it likely to be strong enough to justify the Bank of Canada's forecast of a 3.8 per cent surge in the third quarter.

"This offsets the sour taste from the prior months but, in many ways, we've seen this coming," said Doug Porter, chief economist with the Bank of Montreal.

"The best way to look at this is to average out the two months, so when you look through all the noise (of temporary factors), we're still dealing with an economy that is growing at about 1.5 per cent to two per cent annualized."

Jimmy Jean of Desjardins Capital Markets agreed, saying the central bank is unlikely to alter course as a result of the GDP figure.

"We continue to believe that the first hike (in interest rates) will occur no earlier than the spring of 2015," he predicted.

With files from The Canadian Press