Canadian manufacturing sales rose to the highest level on record in January, Statistics Canada announced March 16, driven by strong gains across three key sectors.
Total sales reached $53.1 billion, which is up 2.3% compared with December and 5.6% year-over-year.
Warren Kirkland, Canadian regional economist for TD Economics, said he is optimistic that January’s gains can be repeated over the coming months, due to the low value of the Canadian dollar and strong demand from the United States.
Sales of motor vehicles (up 9.6%) and vehicle parts (up 4%) saw strong gains in the month, led by shipments of higher-end models. Food sales also had strong growth, increasing 4.6%. These three sectors were responsible for 85% of January’s gains. Meanwhile, falling petroleum and coal shipments partially offset some of the increases, as this sector saw a 5.9% decrease in the month, reaching the lowest level since 2004.
Excluding petroleum and coal, total manufacturing sales increased 3.1% over the month, which is the third consecutive monthly increase.
“We expect that most of the upside remains to be seen across Ontario, Quebec and B.C., but other provinces should share in the spoils also,” Kirkland said in a note to investors.
“On the other hand, we anticipate continued weakness across the major oil producing jurisdictions, most notably Alberta and Saskatchewan, as oil sector-related manufacturing continues to suffer. As well, Alberta recently announced a shift away from coal energy generation that may weigh on coal manufacturing.”
In British Columbia, manufacturing sales increased 0.7%. Quebec was the big winner in terms of percentage growth, with a jump of 8.9% in January. Ontario’s sales increased 3.9%. Meanwhile, Alberta (down 3.8%) and Nova Scotia (down 6.5%) were the only two provinces to see declines in the month.
“We’re due for results from wholesale trade and retail later this week, but today’s data should lend support to the Canadian dollar while weighing on the front end of the Canadian curve, since it suggests that growth will easily surpass the Bank of Canada’s Q1 growth target of 1%,” CIBC Economics’ Nick Exarhos said.
As of press time, the loonie was trading at 74.91 cents U.S., up just under a third of a cent.
@EmmaHampelBIV
