Quick take

Manufacturing sales grow in March

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The Conference Board of Canada’s Economist Liam Daly offers the following insights on today's manufacturing sales data:

The results from March’s Survey of Manufacturing brings signs of progress across a sector that has suffered in the wake of economic restrictions, delays in global shipping and shortages of key production inputs over the preceding months.

Highlights include the following:

  • After a decline in the previous month, manufacturing sales grew by 3.5 per cent totalling $57.8 billion, the highest level since June of 2019. In real terms, sales increased by 2.3 per cent in the month of March.
  • Manufacturing sales grew in all provinces with notable increases enjoyed in Nova Scotia (+24.3%) and Saskatchewan (+10.6%). Ontario and Quebec, which together account for approximately 70 per cent of all manufacturing sales, recorded growth of 2.3 and 2.9 per cent, respectively.
  • Within the manufacturing industry, sales of motor vehicles—which are almost entirely sourced from Ontario—increased by 10.5 per cent. As well, sales of motor vehicle parts also performed well increasing by 7.7 per cent. These positive results are likely a reflection of strengthening demand in the U.S. economy.
  • The growth of sales in the auto segment is welcome at a time when a shortage of semi-conductors has forced a slowdown in many Canadian plants. However, the positive movement in this segment is expected to be temporary as we anticipate shortages will resurface over the coming months following announcements of reduced production by some assembly plants.
  • As governments target infrastructure spending to support the economic recovery and the residential sector remains busy both in Canada in the US, manufacturing sales of non-metallic minerals—which includes building materials such as such as cement and lime—grew by 4.4 per cent.
  • Meanwhile, sales in the wood product manufacturing segment also expanded, growing by 4.6 per cent, reflecting the hot residential markets across Canada and the United States.
  • Elsewhere in the manufacturing sector, growth in sales in the food product segment as well as petroleum and coal products were also key drivers of the overall improvement.
  • Another positive development surrounding manufacturers was that the capacity utilization rate rose from 75.5 per cent in February to 80.1 per cent in March. This is the highest level since October 2019 and reflects the industry becoming busier. A full recovery of the capacity utilization rate to its 2019 level also signals that investment in the sector is ready to turn the corner after a historic contraction last year.

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Liam Daly

Liam Daly

Economist

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