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Canadian manufacturing sales point to growth in overall economy, analysts say

May 16, 2018 6:27 PM
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OTTAWA—Canadian manufacturing sales rose a better-than-expected 1.4 per cent in March, as weakness in motor vehicle sales was more than offset by gains in the metals and aerospace industries, Statistics Canada reported Wednesday.

Economists had expected an increase of 1.2 per cent, according to Thomson Reuters Eikon. Sales rose to $57.1 billion in March. Excluding motor vehicles, parts and accessories, Canadian manufacturing sales were $49.1 billion, up 1.8 per cent from February.

The report was “another pleasant surprise from the Canadian economy,” said TD Bank senior economist Brian DePratto. He noted that much of the growth came from price appreciation, amid currency moves, but there was also a solid climb in volume terms. Overall Canadian manufacturing sales in volume terms were up 0.6 per cent.

“Outside of the resale housing market, and beneath some idiosyncratic shocks early in the year, the Canadian economy continues to perform well,” he wrote.

“There are obviously some countervailing forces at play, but with solid U.S. demand in the cards, the outlook for Canadian manufacturers remains healthy. What’s more, with factories running near full-tilt despite solid investment through 2017, there is a clear incentive for firms to continue building out their capacity to meet demand.”

The March manufacturing statistics signal that the March GDP report will be decent and show the sector had momentum going into the second quarter, Nathan Janzen, senior economist at RBC Economics wrote in a note.

“Although key reports on the retail and wholesale trade sectors are still to come, with data in hand we are tracking a 0.2-per-cent increase in monthly GDP in March. That would build on the 0.4-per-cent February gain that more than retraced a 0.1-per-cent dip in January,” Janzen said.

Also read: Canadian manufacturing sales gain 1.1 per cent in June

Source: thestar.com

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