Canada: Manufacturing sector to continue contributing to growth in 2018 - NBF

Today’s data showed that manufacturing shipments rose in February in Canada 1.9%, above the 1.1% expected. Kyle Dahms, analyst at the National Bank of Canada, noted that the transportation category was the main driver. 

Key Quotes:

“Manufacturing shipments rose 1.9% m/m in February to C$55.8 billion, on the tail of two consecutive declines. Sales expanded in 14 of the 21 broad industries surveyed including transportation equipment (+6.6%), primary metal manufacturing (+4.8%) and paper manufacturing (+3.2%). These increases were more than enough to offset a decline in shipments for the petroleum/coal products (-2.1%) and machinery (-1.6%) categories.”

“Following two months of disappointing results, the Canadian factory report came in stronger than expected in February. The transportation category was the main driver of the increase with the motor vehicles sub-category rising 8.9% on higher volumes (this result comes after special plant shutdowns in the prior month).”

“Although growth for the Canadian economy is set to slow down in the first quarter, the manufacturing sector will still provide some lift.”

“Alongside an addition to inventories, real manufacturing shipments are on track to rise 2.0% annualized (assuming no change in March). This follows a +3.6% reading in Q4 of 2017 and would represent the sixth increase in seven quarters. All in all, we expect the manufacturing sector to continue contributing to growth in 2018 assuming positive developments in NAFTA negotiations.”