Quick take

Sales growth in December ends a difficult year for Canadian manufacturers

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  • Canadian manufacturing sales rose by 0.7 per cent (m/m) in December. This was slightly lower than Statistics Canada’s flash estimate, which called for a 0.8 per cent increase. After accounting for price effects, manufacturing sales rose by 0.6 per cent.
  • Sales grew in 11 of the 21 manufacturing subsectors. Sales of leather and allied products (+13.7 per cent) and plastics and rubber products (+11.8 per cent) grew the most. Meanwhile, clothing manufacturing sales (-9.2 per cent) saw the sharpest decline.
  • Manufacturing sales grew in 7 of 10 provinces, with Manitoba (+7.2 per cent) and Prince Edward Island (+3.3 per cent) registering the strongest gains. Sales fell in Newfoundland and Labrador (-6.9 per cent), Quebec (-1.2 per cent) and Saskatchewan (-0.4 per cent).
  • New orders increased by 1.4 per cent, while unfilled orders grew by 1.7 per cent.

Key insights:

  • Modest growth in December despite flooding in British Columbia brought a turbulent year for Canadian manufacturers to a close. Still, plenty of challenges lie ahead for the manufacturing sector. Although sales expanded month-over-month, the spread of the Omicron variant began to slow production in the final weeks of 2021. As the new year began, the manufacturing sector saw some of the highest absenteeism due to illness or disability, which will likely dent January’s data.
  • The blockade of the Ambassador Bridge near Windsor negatively impacted manufacturing sales, which will make its mark in February’s data. While the blockade lasted six days, the volume of trade – particularly auto exports and imports – which crosses the bridge every day ranges in the hundreds of millions. Lacking access to key inputs and intermediate components, Canadian automakers were forced to cut production. Social unrest over pandemic policies continues, and additional disruptions to business as usual for manufacturers remains a risk. These events may also damage Canada’s reputation as a reliable trading partner and may strengthen Buy American’ incentives in the United States.
  • The ground is also shaking beneath Ukraine. While a Russian invasion would not directly harm Canadian manufacturing, the indirect economic effects of a conflict could be damaging. Oil prices are rapidly climbing, and conflict could disrupt the availability or prices of key manufacturing inputs.

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Kiefer Van Mulligen

Kiefer Van Mulligen

Economist

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