Canadian factory sales surged for a second consecutive month, climbing 3% in March on the back of soaring energy prices and a rebound in auto production.
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Canada Factory Sales Rise 3% as Energy Prices Fuel Rebound
Canadian manufacturing activity continued a strong rebound in March, with factory sales rising 3% to their highest level in over a year, though the headline number slightly missed analyst expectations. Statistics Canada reported Friday that sales reached C$73.57 billion ($53.67 billion), largely powered by a spike in energy prices linked to geopolitical tensions.
“Despite the headwinds to global manufacturing from higher energy prices, the Canadian sector is enjoying at least a brief positive run,” Stephen Brown, chief North America economist at Capital Economics, said.
The monthly gain built on a revised 3.4% increase in February, bringing first-quarter sales up 0.1% overall. The primary driver was a 22.7% jump in the value of petroleum and coal products, though sales volumes for the sector declined 3.5%. Sales of transportation equipment rose 6%, buoyed by increased motor-vehicle activity after a major automaker completed retooling.
The strong manufacturing data points to potential upside for Canada’s first-quarter GDP and complicates the Bank of Canada's path on future interest rate decisions. Continued economic strength could temper calls for rate cuts, potentially supporting the Canadian dollar as the central bank weighs the impact of inflation against a resilient industrial sector.
Sector-Specific Strength
The gains in March extended beyond the energy sector, with nine of the 21 manufacturing segments tracked by Statistics Canada posting increases.
A standout performer was the aerospace industry, where production of products and parts climbed 5.2% from a month earlier to its highest level on record. The sector continues to benefit from robust global demand for commercial and business aircraft, along with related parts and maintenance services.
In the auto sector, the completion of retooling at one major plant and the addition of a new production shift at another helped lift motor-vehicle activity for a second straight month. However, despite the recent gains, sales of motor vehicles were down 13.6% on a quarterly basis.
Forward-Looking Indicators
Forward-looking indicators also showed strength. New orders jumped 4.7% in March, while the stock of unfilled orders—which will contribute to future sales—increased by 2.4%. Factory inventories rose 1.3% from February.
This article is for informational purposes only and does not constitute investment advice.
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