Ontario and Quebec drive manufacturing sales to a record high in February.
Although gains were not shared across all provinces, February was an excellent month for the manufacturing sector overall. Ontario and Quebec both recovered from a weak start to the year, driving national manufacturing sales to a new all-time monthly high. All told, manufacturing output was up 1.9 per cent over January, to reach $55.8 billion, eclipsing the previous high of $55.5 billion, set in November.
Moreover, sales growth in February was grounded entirely in higher output volumes rather than price effects. Real (price-adjusted) manufacturing sales rose by 2.0 per cent, suggesting that the strong performance in February came despite slightly weaker prices. With February’s increase, inflation-adjusted manufacturing sales are now at their highest level in nearly a decade.
Adding to the good news, there was a strong improvement in the forward-looking indicators as well. New manufacturing orders jumped 5.0 per cent in February – a truly remarkable surge – to reach $58.4 billion. The increase was driven by a spike in aerospace orders, which were up 56 per cent (from $2.3 billion in January to $3.6 billion in February). However, demand is increasing for other goods as well. New non-aerospace orders were 2.8 per cent higher in February to reach $54.8 billion. Except for a one-time blip four years ago, new manufacturing orders have never been higher.
Much of the increase in manufacturing output in February was the result of a recovery in the auto sector. Motor vehicles and parts production had fallen by about 6.5 per cent in January (about $539 million), but recovered those losses a month later with a 7.3 per cent increase ($558 million). Even so, motor vehicles production is still tracking below levels seen in 2016 and the first half of last year.
Although the largest dollar-value increase was in the auto sector, there were strong gains in other industries as well. Primary metals production was up 4.8 per cent ($198 million) compared to January, while aerospace output was 4.2 per cent higher ($66 million). Fabricated metals, forest products, and computer and electronics products sales were also notably higher.
Meanwhile, sales of machinery and refined petroleum both dipped in February. In the case of machinery, the decline of 1.6 per cent represents the second consecutive month of lower sales after a tremendous surge through most of 2017. For its part, refined petroleum production fell on lower output from the New Brunswick refinery.
As noted at the outset, February’s gains were almost entirely driven by higher output in Ontario and Quebec. Buoyed by the recovery in automobile and parts production, manufacturing sales from Ontario were up 3.0 per cent (nearly $750 million) to reach their highest level since last May. Meanwhile, output in Quebec was 2.2 per cent higher ($292 million), largely driven by strength in primary metals.
On a percentage growth basis, however, Canada’s manufacturing growth leaders in February were in Atlantic Canada. Output from PEI and Nova Scotia rose by 17.2 per cent and 6.5 per cent, respectively, as both provinces recovered from losses the previous month.
Meanwhile, manufacturing sales were notably lower in BC, New Brunswick and Manitoba. In each case, there was a specific driver behind the decline. In New Brunswick it was lower refined petroleum sales; in Manitoba it was a sharp drop in machinery production; and in BC it was lower output from producers of electrical equipment, appliances and related components.