By Canadian factory sales rebounded in July, driven by a surge in shipments of food products and a significant increase in vehicle sales. According to Statistics Canada, manufacturing shipments rose 1.6% from the previous month, reaching a seasonally adjusted total of CAD 71.89 billion (approximately $53.21 billion). This result exceeded the agency’s initial estimate of a 0.7% increase for the month. Additionally, June’s decline was revised to 2.0%, down from the previously estimated 1.7% fall.
Sales on a volume basis, factoring in constant dollars, also experienced growth in July, rising 0.9% to CAD 56.63 billion. This positive sales trend occurred despite the disruption to supply chains caused by a strike by port workers on Canada’s West Coast in July. Approximately 13% of manufacturing plants across the country were impacted by the strike, leading to shortages of raw materials and transportation complications.
Notably, food manufacturers witnessed a robust 3.1% increase in sales after five consecutive months of decline. The grain and oilseed milling industry drove significant gains in this sector. In terms of volume, sales of food products saw a 2.5% increase compared to June.
Sales in the motor vehicle industry reached their highest level since May 2017, growing by 3.5% in July. This improvement was attributed to the easing of global supply chain challenges. Additionally, sales of vehicle parts rebounded following a sharp decline in June.
Overall, Canada’s manufacturing sector demonstrated resilience and recovery in July, with notable contributions from the food and automotive industries. Despite the strike-related disruptions, strong sales figures indicate positive momentum for the sector as it continues to navigate through these challenging times.
Manufacturing Sales Rise in July
Manufacturing sales in Canada, excluding motor vehicles, parts, and accessories, experienced a notable increase of 1.3% compared to the previous month. Although overall sales were positively impacted, the petroleum and coal sectors faced a significant decline in June. However, July saw a rebound with a robust 4.6% increase, primarily due to rising prices.
On the other hand, the paper products industry encountered a sharp decline of 4.6%, reaching its lowest level since December 2021. Port strikes greatly affected over half of the paper-products manufacturers in British Columbia, contributing to this unfortunate decrease.
Notably, factory inventory levels experienced a decline of 0.7% in July. This reduction can be attributed to decreased raw material and goods in process availability. Additionally, the stock of unfilled orders, which represents potential future sales unless canceled, decreased by 1.0% during the same time period. Furthermore, new orders witnessed a marginal decrease of 0.1%.
These statistics reflect the slowing pace of economic activity in Canada. In the second quarter of the year, the country unexpectedly experienced a contraction of 0.2% in gross domestic product on an annualized basis. This came as a surprise after a period of growth during the first three months of 2023.
The challenges faced by the manufacturing sector persisted into August, with both output and new orders declining. This resulted in companies making job cuts as a means to manage the situation. S&P Global’s monthly purchasing managers index dropped to 48—the lowest level seen since mid-2020—down from 49.6 in the previous month.
Despite these challenges, it is important to note that the Canadian manufacturing industry continues to adapt and navigate through these uncertain times.
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