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Falling Petroleum and Coal Sales Burned Canadian Manufacturing Sales in March

Canadian Economics

By: Kiefer Van Mulligen

  • Canadian manufacturing sales fell by 2.1 per cent (m/m) in March. This was a slightly shallower decline than Statistics Canada’s flash estimate which called for a 2.8 per cent drop. After accounting for price effects, real manufacturing sales volumes fell by 2.0 per cent (m/m).
  • Nominal sales grew in only 4 of the 21 manufacturing subsectors. Sales of machinery products (+$129 million) grew the most. Meanwhile, sales of petroleum and coal products (–$688 million) saw the sharpest nominal decline.
  • Manufacturing sales grew in only 2 of 10 provinces. In relative terms, sales fell the most in Newfoundland and Labrador (–14.1 per cent) and grew the most in Manitoba (+1.4 per cent).
  • New orders fell by 4.7 per cent, while unfilled orders fell by 0.8 per cent.

Key insights

  • In March, manufacturing sales posted their weakest growth since October 2023. Falling sales of petroleum and coal products contributed most to the drop in overall sales, though the decline was broad-based. Only 4 manufacturing subsectors reported sales growth. Notable declines in motor vehicle manufacturing sales and, to a lesser extent, food manufacturing sales added to sales’ weakness. New orders also suffered their sharpest month-over-month decline since July 2022 which bodes poorly for near-term sales. On the bright side, real sales of manufactured aerospace products have yet to surpass their pre-pandemic level, but they continued an upward recovery trend in March.
  • Looming strike action by the Teamsters Canada Rail Conference could negatively impact manufacturing sales. This impact would result primarily from disruption to Canadian supply chains and potential backlogs at major ports. The union, representing workers from the Canadian National Railway and the Canadian Pacific Kansas City Railway secured a mandate for potential strike action beginning as early as May 22. The federal government petitioned the Canada Industrial Relations Board to consider whether the strike would endanger Canadians’ health and safety (through disruptions to gasoline supplies, for example). This intervention has bought time to negotiate before more than 9,000 workers walk off the job.
  • Recently announced investments from Honda will help to secure the future of motor vehicle manufacturing in Canada. The company will put forward a $15 billion outlay on four new electric vehicle (EV) production facilities, including an EV assembly plant and a battery plant in Alliston, Ontario. The assembly plant will be complete in 2028. This investment is the latest in a series of large private (and public) expenditures on EV-related development. Both federal and provincial support will also back Honda’s investment through incentives like the EV Supply Chain Investment Tax Credit.
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For more details about Canadian manufacturing and industrial trends, please explore our Industry Lens reports.

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