OTTAWA – Canada’s exporters appear to be finally delivering the goods.
Not only are the country’s manufacturers revving up product sales, but they are doing the work in record numbers according to the latest numbers for January – with foods, vehicles and auto parts driving much of the gain.
Statistics Canada said Wednesday that manufacturing sales jumped 2.3 per cent to $53.1 billion throughout the month, a record high, and far better than the 0.5-per-cent increase most analysts had envisioned along with a sizeable improvement on December’s 1.4-per-cent gain – although even that tally was revised upward from the previous estimate of 1.2 per cent.
When combined with November growth reading, which the federal data agency also revised to 1.4 per cent from 1.2 percent, this might mark a level for Canadian factories following a painful days during and following the 2008-09 recession.
“Canadian exports are starting to exhibit signs of life,” Nick Exarhos, an economist at CIBC economics, wrote in a note to investors. Given the strong January export data, economic development in the very first quarter of 2016 will “easily surpass” the Bank of Canada’s one-per-cent forecast, he said.
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The central bank will update its economic outlook on April 13, when it publishes its quarterly Monetary Policy Report and announces its decision on whether to adjust the bank’s trendsetting rate of interest level, now at 0.5 per cent. That decision will incorporate spending details within the federal government’s 2016-17 budget, which will be tabled on March 22.
On Wednesday, Statistics Canada said January sales increased in 16 of 21 industries tracked by Statistics Canada, making up a lot more than 80 percent of the country’s manufacturing sector.
“It’s a continuation of the trend we’ve been seeing over the past couple of years,” said Jason Myers, president CEO of the Canadian Manufacturers & Exporters.
“What it truly shows is the strength of the export side. We’re taking advantage of a greater America economy along with a more competitive dollar. But we’re also seeing volumes pick up too, so that means manufacturing isn’t just benefitting from the currency exchange but additionally (we’re) selling more products – especially in the U.S., but also internationally,” Myers said.
“That growth around the export side is offsetting the downturn within the energy market, particularly in the oil sands.”
Vehicle sales rose 9.6 percent to $6.6 billion in January, the greatest level since November 2000 and also the biggest monthly increase since March 2015.
Sales in auto parts gained four per cent in January to $2.7 billion, marking the 5th straight monthly increase. Foods grew 4.6 per cent to $8.4 billion, an archive high in value terms. Meanwhile, the company reported sales of petroleum and coal products fell 5.9 per cent.
BoC governor Stephen Poloz continues to be urging manufacturers to improve their investments and increase use of global markets. The sector was criticized by former central bank boss Mark Carney – now heading the Bank of England – for sitting on “dead money” in reserve funds rather than spending it on expansion.
Since the recession, Canada’s economy has been underpinned by consumer spending – encouraged by near-record-low rates of interest, thanks in large part to lending levels set through the central bank itself. However the global collapse in oil prices, which pushed our economy into a recession in the fist 1 / 2 of 2015, has focused the necessity to broaden the country’s economic reach.
“Although still early, recent data ought to provide some reassurance to the Bank of Canada the long-awaited rotation in the driver of growth away from the energy sector, which continues to be overwhelmed by lower prices, to sectors better positioned to benefit from stronger external demand tied to a greater Canadian dollar and improving U.S. economy, is under way,” Nathan Janzen, senior economist at RBC Economics Research, said in a note on Wednesday.
Financial Post
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