CANADA — RBC Capital Markets says a resurgent goods-producing sector is part of Canada’s broadening growth picture, which was a factor in the Bank of Canada raising its trend-setting interest rate a week ago.
While a rebound in goods production has been led by the energy mining industry, stronger manufacturing activity also has helped boost Canada’s GDP growth, reports RBC, noting that the manufacturing report points to this trend continuing with shipment volumes rising at their fastest year-over-year pace since the end of 2014.
RBC writes in a press release, “We look for a 12 percent gain in manufacturing GDP to add to May’s output figures, though that increase is expected to be swamped by a drag from the construction sector reflecting a week-long strike in Quebec.
The release continues, “Even with overall activity expected to be flat in the month, a solid trend to start Q2 supports our forecast for a 2.7 percent annualized increase in GDP in the quarter.”
- Manufacturing shipments rose 1.1 percent in May, the third consecutive monthly increase. April’s 0.4 percent gain was revised down from a previously-reported 1.1 percent increase.
- The gain was widespread with higher sales in 16 of 21 sub-industries. The transportation sector and chemical manufacturing posted the largest contributions.
- Machinery sales posted a fifth consecutive monthly increase and were up 22 percent from a year ago. The increase reflects both stronger exports and improving M&E investment at home.
- Price movements were not a factor on net as sales volumes also rose 1.1 percent in May.
With some drawdown in inventories, RBC does not expect the entire 1.1 percent gain in sales volumes to be captured in May’s manufacturing GDP that more closely reflects new production. RBC predicts a slightly smaller 1/2 percent increase on a GDP basis.
More information on economic updates can be found at RBC Capital Markets.
Source: RBC Capital Markets press release