Quick take

More sales, more problems for manufacturers in January

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  • Canadian manufacturing sales rose by 0.6 per cent (m/m) in January. This was significantly lower than Statistics Canada’s flash estimate, which called for a 1.3 per cent increase. After accounting for price effects, manufacturing sales volumes fell by 1.8 per cent.
  • Nominal sales grew in 14 of the 21 manufacturing subsectors. In absolute terms, sales of petroleum and coal products (+6.8 per cent) and wood products (+6.5 per cent) grew the most. Meanwhile, sales of transportation equipment (-8.2 per cent) saw the sharpest decline.
  • Manufacturing sales grew in 5 of 10 provinces, especially in British Columbia (+4.3 per cent) and Quebec (+3.9 per cent). Sales fell the most in Newfoundland and Labrador (-8.6 per cent) and Saskatchewan (-6.0 per cent).
  • New orders increased by 1.1 per cent, while unfilled orders grew by 1.8 per cent.

Key insights:

  • In January, manufacturing sales inched upward on the back of higher prices. However, real sales volumes fell as producers dealt with higher levels of absenteeism due to the Omicron wave. As the pandemic recedes again, COVID-19 should present less of a problem for production. But manufacturers are still struggling with worker shortages in an increasingly tight labour market. In February – a month where job growth exceeded even the most optimistic projections – employment in the manufacturing industry grew by a humble 0.1 per cent.
  • Commodity prices have surged in the wake of Russia’s invasion of Ukraine, and this has added a new dynamic to the already escalating costs of doing business for Canadian manufacturers. With some Russian exports cut out of global markets and risk premiums on the rise, materials like copper, nickel, aluminum, and palladium have become more expensive and harder to source. As Canada and much of the world weigh the consequences of doing business with belligerent regimes, uncertainty over global supply chains remains high.
  • Closer to home, supply chain troubles are not nearly over. Most Canadian manufacturers report that they are still struggling with lower production and increasing costs as a result. In February, the blockade of the Ambassador Bridge hampered the movement of manufacturing products and will make a dent in next month’s release. Looming labour disruption at CP Rail threatens to further jostle manufacturing supply chains. Higher and persistent inflation may contribute to more widespread labour unrest throughout many industries.

Russian Invasion of Ukraine: Access the latest insights

Kiefer Van Mulligen

Kiefer Van Mulligen

Economist

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