Alberta manufacturing shows slight recovery
Canada’s manufacturing sector has been down, but it’s still not out.
That much is obvious, given the June gain in factory sales — an unexpectedly strong pace of 0.8 per cent — and it could be interpreted as the beginning of a new pattern, one where the growth chart is on a steady rise. But that might be too optimistic. Tuesday’s data was better than the 0.7-per-cent increase for June analysts had forecast, with Statistics Canada showing factories soaring back from a one-per-cent drop during the previous month.
That works out to a sales value of $50.2 billion.
Ontario was the engine driving a large portion of the gains, which were led by machinery and transportation equipment. Alberta gained 1.8 per cent to $5.2 billion, the highest in seven months.
“It’s still too soon to break out the champagne and call the end of this recession, but an increasing number of economic indicators are starting to suggest the very worst of it may be over and that a more stable economy is starting to take shape,” ATB Financial chief economist Todd Hirsch wrote in a commentary Tuesday.
Impacted by persistently low oil prices, total manufacturing shipments remain down about 15 per cent over the past 12 months, Hirsch said.
Shipments of food products, refined petroleum, chemicals and machinery and equipment from Alberta all showed gains while shipments of plastics, wood products and fabricated metal declined.
Sales in Saskatchewan were $1.22 billion, up 4.3 percent from May, the biggest gain among all provinces. Nationally, overall sales rose in 15 of the 21 industries tracked by Statistics Canada.
The manufacturing data “has gone back and forth. It’s basically been fluctuating around the $50-billion mark per month,” said Mike Holden, director of policy and economics at Canadian Manufacturers & Exporters.
“It was a decent increase (in June) and we saw some growth in some of the sectors that had been struggling recently — machinery, fabricated metals and motor vehicles. It’s too early to point to that as being the beginning of a turnaround.
“It’s good news. It’s better to be growing than not,” said Holden, who is based in Calgary.
“But I think we’d have to wait for a few more months of data before we point to that (June report) as a new upward trend.”
Since the economic downturn, factory operators have been criticized for not investing enough money to expand their export markets.
Manufacturers have also been hurt by the oil-price collapse that hampered activity in Alberta, which has also been sidelined by recent wildfires in that province.
Brian DePratto, at TD Economics, noted that “while too late to make much impact on secondquarter growth, (Tuesday’s) report points to a healthy rebound in output thereafter, as temporary factors fade.”
Many economists expect an economic rebound in the third quarter of this year of between three and four per cent as oil production gets back on track and rebuilding efforts begin in the Fort McMurray area that was hardest hit by spring wildfires.
Statistics Canada said in June that 118 manufacturers, or about 3.2 per cent of those surveyed, reported being affected by the wildfire and evacuation of Fort McMurray.
That was down from 194 in May. Of those that reported an impact on their business in June, the agency said about 38 per cent were able to quantify the effects, with the majority reporting a loss of sales.