Statistics Canada says manufacturing sales hit new record of $53.1 billion in January

OTTAWA – Canada’s exporters appear to be finally delivering the goods.

Not only are the country’s manufacturers enhancing product sales, but they’re doing it in record numbers based on the latest numbers for January – with food products, vehicles and auto parts driving a lot of the gain.

Statistics Canada said Wednesday that manufacturing sales jumped 2.3 per cent to $53.1 billion throughout the month, an archive high, and better than the 0.5-per-cent increase most analysts had hoped for along with a sizeable step up from December’s 1.4-per-cent gain – although even that tally was revised upward in the previous estimate of just one.2 percent.

When combined with November growth reading, that the federal data agency also revised to at least one.4 per cent from 1.2 per cent, this could mark a turning point for Canadian factories following a painful days during and following the 2008-09 recession.

“Canadian exports are beginning to exhibit indications of life,” Nick Exarhos, an economist at CIBC economics, wrote in a note to investors. Given the strong January export data, economic development in the very first quarter of 2016 will “easily surpass” the financial institution of Canada’s one-per-cent forecast, he said.

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The central bank will update its economic outlook on April 13, when it publishes its quarterly Monetary Policy Report and announces its decision on whether to adjust the bank’s trendsetting interest rate level, now at 0.5 per cent. That decision will incorporate spending details within the federal government’s 2016-17 budget, which is tabled on March 22.

On Wednesday, Statistics Canada said January sales increased in 16 of 21 industries tracked by Statistics Canada, making up a lot more than 80 per cent from the country’s manufacturing sector.

“It’s a continuation of the trend we have been seeing in the last couple of years,” said Jason Myers, president CEO of the Canadian Manufacturers & Exporters.



“What it truly shows may be the strength of the export side. We’re taking advantage of a stronger America economy along with a more competitive dollar. But we’re also seeing volumes get as well, to ensure that means manufacturing is not just benefitting in the foreign exchange but also (we’re) selling more products – especially in the U.S., but also internationally,” Myers said.

“That growth around the export side is offsetting the downturn in the energy market, especially in the oil sands.”

Vehicle sales rose 9.6 percent to $6.6 billion in January, the greatest level since November 2000 and also the biggest monthly increase since March 2015.

Sales in auto parts gained four per cent in January to $2.7 billion, marking the 5th straight monthly increase. Foods grew 4.6 per cent to $8.4 billion, an archive high in value terms. Meanwhile, the agency reported sales of petroleum and coal products fell 5.9 percent.

BoC governor Stephen Poloz continues to be urging manufacturers to increase their investments and increase use of global markets. The sector was criticized by former central bank boss Mark Carney – now heading the Bank of England – for sitting on “dead money” in reserve funds instead of spending it on expansion.  

Since the recession, Canada’s economy continues to be underpinned by consumer spending – encouraged by near-record-low rates of interest, thanks mainly to lending levels set by the central bank itself. However the global collapse in oil prices, which pushed our economy into a recession within the fist half of 2015, has focused the necessity to broaden the country’s economic reach.

“Although still early, recent data should provide some reassurance towards the Bank of Canada the long-awaited rotation in the driver of growth away from the energy sector, which remains overwhelmed by affordable prices, to sectors better positioned to profit from stronger external demand associated with a stronger Canadian dollar and improving U.S. economy, is arrived,” Nathan Janzen, senior economist at RBC Economics Research, said in a note on Wednesday.

Financial Post

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