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Canadian factory sales hit record, mark second month of gains

A Chrysler auto assembly worker is seen in this file photo. Statscan says factory sales rose 1.1 per cent in April.

© Rebecca Cook / Reuters/Reuters

Canada's manufacturing sector enjoyed a second straight month of solid gains in April, as a strong rebound in the energy sector helped propel sales values to record highs.

Statistics Canada reported that on a seasonally adjusted basis, manufacturing sales rose 1.1 per cent month over month in April, to a record $54.4-billion. The gain follows a revised 0.8-per-cent increase in March, as the sector resumed growth following a brief lull early in the year.

Statscan said 13 of 21 industries showed sales gains, representing 62 per cent of the sector.

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Some of the April gains were due to higher prices. On a volume basis, sales were up a more modest, but still solid, 0.5 per cent.

Both the sales value and volume readings were slightly stronger than economists had anticipated.

Canadian Imperial Bank of Commerce economist Andrew Grantham said the April report "suggests the uptrend in manufacturing since mid-2016 is continuing."

"Manufacturing shipments provided a solid first indicator for April GDP," he said in a research note.

The April gains were led by an 8.9-per-cent jump in sales of petroleum and coal products, which rebounded from a downturn in March. Statscan also noted strength in primary metals (up 3.8 per cent) and paper products (up 3.5 per cent).

Also of note was a 1.5-per-cent rise in machinery sales, their fourth straight monthly increase. The continuing trend is another indication that business investment is picking up this year, both in Canada and in the key U.S. export market.

But on the downside, motor vehicle sales fell 3.7 per cent amid recent signs that U.S. consumers' appetite for new cars is cooling from last year's hectic pace.

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Over all, though, economists said the manufacturing report is another sign that Canada's economy has emerged from its booming first quarter on a still-solid growth path.

"The broad tone of this report reinforces expectations that second-quarter GDP growth is pointing toward durable growth, following supercharged growth in the first quarter," said Bank of Nova Scotia economist Derek Holt in a research note. "What is impressive … is that very strong gains in the first quarter are so far not being unwound and instead they are being built upon, just at a slower pace."

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About the Author
Economics Reporter

David Parkinson has been covering business and financial markets since 1990, and has been with The Globe and Mail since 2000. A Calgary native, he received a Southam Fellowship from the University of Toronto in 1999-2000, studying international political economics. More

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