CANADA — Price increases accounted for more than half of a surprisingly large 1.4 percent increase in nominal manufacturing sales in March — reportedly in part due to a weaker Canadian dollar in the month increasing the Canadian dollar value of aerospace production.
Volume sales still posted a solid 0.6 percent increase, though. That built on a 2.2 percent jump higher in February and left the measure up a respectable 4.5 percent from a year ago. Inventory volumes were unchanged in March after a big 1.4 percent increase in February — but only because the stock of raw material inputs fell. Goods in process and final goods inventories, a better indicator of monthly production in the sector, rose about 1 percent (excluding price impacts) by the RBC’s count.
The RBC reported, “With sales also growing, the implied production gain bodes well for the manufacturing sector to make a solid positive contribution to overall GDP growth for a third consecutive month in March.Exports also rose solidly in March, and labor markets continued to improve. On balance, the data continues to point to further economic growth. Although key reports on the retail and wholesale trade sectors are still to come, with data in hand we are tracking a 0.2 percent increase in monthly GDP in March.”
This would build on the 0.4 percent February gain that more than retraced a 0.1 percent dip in January. Growth has still clearly slowed from an unsustainable pace last year but the data also continues to suggest that earlier GDP decline at the start of the year had more to do with transitory disruptions than a fundamental deterioration in the economic backdrop. We continue to expect underlying growth trends are still running at a slightly ‘above-potential’ pace.
SOURCE: RBC press release