B.C. factories were busy in September as manufacturing sales surged to heights last seen in 2007. Dollar-volume shipments rose 1.9% from August to a seasonally adjusted $3.66 billion, the third straight gain and the fifth over a six-month period.
While data is unavailable for many sub-sectors, there was a clear upshift in forestry-related output. Wood product manufacturing rose 2.9% and paper manufacturing grew 3.4%. Combined, these sectors contributed to about 50% of the net monthly gain. In addition, food (1.7%) and machinery (3%) were also significant contributors to growth.
A surprise lift occurred in the transportation equipment sector, which posted an increase of 12% from August and accounted for more than a quarter of the total monthly gain. Granular details are generally sparse, but a 21% rise in aerospace products played a key role in the increase.
September’s gain added to an already strong year for the B.C. manufacturing sector, which has enjoyed the significant benefits of a favourable exchange rate and U.S.-led demand. Through three quarters, sales have climbed 7% from the same period in 2013.
Higher-growth sectors have been paper, machinery and transport equipment, all of which are up about 12%. Wood product manufacturing was up a more modest 4%, but given it makes up about 20% of total manufacturing in the province, the contribution to growth was closer to 11%.
B.C.’s manufacturing sector will prove to be a solid growth sector this year and next as export-related demand improves. Real manufacturing growth is forecast to reach about 4%, with a gain of 3% forecast for 2015.•
Bryan Yu is an economist at Central 1 Credit Union.
