- In dollar terms, Canadian manufacturing sales grew by 0.4 per cent (m/m) in September. This was higher than Statistics Canada’s flash estimate for September, which called for a 0.1 per cent decrease. After accounting for price effects, real manufacturing sales volumes fell by 0.6 per cent (m/m).
- Nominal sales grew in 10 of the 21 manufacturing subsectors. Sales of petroleum and coal products (+$543 million) and wood products (+$87 million) grew the most. Meanwhile, sales of transportation equipment products (–$110 million) saw the sharpest nominal decline.
- Manufacturing sales grew in 5 of 10 provinces. In relative terms, sales fell the most in Newfoundland and Labrador (–15.9 per cent) and grew the most in Alberta (+4.3 per cent).
- New orders fell by 1.7 per cent, while unfilled orders fell by 1.2 per cent.
We expect that manufacturing output has contracted and will continue to contract into the first quarter of 2024. Real manufacturing sales fell in August and September. The S&P Global Canada Manufacturing Purchasing Manager’s Index remained below 50 for a sixth consecutive month in October, which suggests the sector has been contracting. Employment in manufacturing has also fallen from a peak in July. And new orders have started to trend downward. Yet, other indicators muddy the water. Capacity utilization rates are holding fast. Wage growth in manufacturing (up 7.1 per cent year-to-date) has outpaced the all-industry composite. We may be heading into a recession (and might already be there), but these mixed signals suggest that the manufacturing sector is holding up somewhat against the pressure.
Yet, labour action may be obscuring the signals sent by recent manufacturing sales releases. In September, the United Auto Workers strike in the United States likely weighed on transportation equipment production in Canada. This manufacturing subsector posted nearly the weakest absolute month-over-month decline of any subsector. Motor vehicle manufacturing is highly integrated between the two countries and disruptions to the smooth transfer of components and parts can slow down assembly lines in Canada. The strike in the U.S. extended well into October, so we expect further weakness in next month’s motor vehicle manufacturing sales. Auto industry strikes followed closely on the heels of the strike at the Port of Vancouver and along the west coast, which took a bite out of sales in July and August. This could complicate the use of sales data as a recessionary herald.
For more details about Canadian manufacturing and industrial trends, please explore the Industry Lens.