Manufacturing rebounds strongly thanks to strong transport growth
Canadian manufacturers enjoyed a higher than expected jump in sales through February as industry revenues rose 1.9% to $55.8bn.
Data from Statistics Canada shows that sales were up in 14 of 21 industries, representing 72.2% of the total Canadian manufacturing sector, painting a more optimistic picture than analysts had predicted.
The most significant contributor was the transport equipment subsector, which witnessed a 6.6% rise in business to $10.7bn. This growth was due to advances in the motor vehicle ( 8.9%) and motor vehicle parts ( 4.8%) markets.
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Sales rose in six provinces in February. However, Ontario and Quebec were the main contributors to this growth, posting respective rises of 3% and 2.2% to $25.9bn and $13.5bn.
After falling 2.1% in January, sales in Ontario rose 3.0% to $25.9 billion in February
However, not all manufacturing subsectors performed strongly. These increases seen across most of the sector were partially offset by a 2.1% decrease in the petroleum and coal products industry, whose sales totalled $5.8bn, which was partly explained by the decrease in the price of refined products.
British Columbia posted the largest monthly decrease (-1.3%) and its fourth consecutive monthly decline. The decline in February was mostly due to lower sales in the electrical equipment, appliance and component industry.
Despite this, the overall picture is upbeat. Kyle Dahms, analyst at the National Bank of Canada, told FXStreet: “Although growth for the Canadian economy is set to slow down in the first quarter, the manufacturing sector will still provide some lift.
“All in all, we expect the manufacturing sector to continue contributing to growth in 2018 assuming positive developments in NAFTA negotiations.”