Factory exports not translating into jobs: report

It’s a recurring theme among policy-makers and economists: Canadian manufacturers aren’t taking enough advantage of a weak dollar to expand their operations outside the country and help lift the economy out of its post-recession doldrums.

But that scenario may not tell the whole story.

In general, manufacturers have “responded better than advertised” when it comes to tapping into current global demand and currency movements, CIBC World Markets said in a report Wednesday.

Export volumes by Canadian plants have managed to keep up with this demand — albeit at a slower pace than before the 200809 recession — and it has been dollar-sensitive sectors that have been leading the way. Since 2012, for instance, shipments of manufactured goods have increased by 12 per cent.

“The real disconnect is the inability of manufacturers to translate these export gains into GDP and employment gains,” CIBC economists Benjamin Tal and Katherine Judge wrote.

The Canadian currency was last at par with the U.S. dollar in late 2012, but it has been weakening steadily ever since, making our exports more affordable — although resulting in higher costs for imports, including machinery and other equipment. The loonie was trading around 75 cents US on Wednesday, the lowest level — based on a yearly average — since 2003.

“So, we’re not translating those export gains into employment and GDP,” Tal said. “But maybe companies don’t need any more (employees). They’ve hired enough. Or maybe they can’t find the people they want,” he said.