Smaller-than-expected deficit came as exports rose 1.3% for the month.
Growth came as sales gained in six of the seven subsectors.
Sales were up in 12 of 21 industries, representing 56.4% of the sector.
Manufacturing and construction sectors had the lowest shares, at 14.4% and 12.8%.
Increase outpaces US job creation, figures show an increase of just 20,000 new positions.
Growth in July means the sector had a good third quarter.
Economists had expected an increase of 0.1 per cent in June.
An improvement over April’s 1.1% drop and ahead of economists’ projections.
Manufacturing employment was down by 18,000, virtually unchanged compared with a year ago.
Economy grew at annualized pace of 1.3 per cent in Q1 2018, compared to 1.7 per cent in Q4 2017.
Statistics Canada says core measure above 2% for first time in six years.
Much of the growth came from price appreciation but volumes were up.
Rebound in the mining and oil and gas extraction sector, gains 2.4% for the month.
Advances in 14 of 21 industries, representing 72.2% of the sector.
Surplus with the United States narrowed to $2.6 billion compared with $2.9 billion in January.