• Manufacturing sales jumped 1.4% in March.
  • More than half of the increase was due to higher prices. Volume sales still rose a solid 0.6%, though, to build on a 2.2% jump in February.
  • With data in hand, we are tracking a 0.2% increase in Mach GDP. That would leave growth in Q1 as a whole at about 1.8% (annualized rate) despite a 0.1% dip in January that increasingly looks to have been more a result of transitory disruptions than a marked deterioration in underlying trends

Our Take:

Price increases accounted for more than half of a surprisingly large 1.4% 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% increase, though. That built on a 2.2% jump higher in February and left the measure up a respectable 4.5% from a year ago. Inventory volumes were unchanged in March after a big 1.4% 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% (excluding price impacts) by our count. 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.

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Exports also rose solidly in March, and labour 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% increase in monthly GDP in March. That would build on the 0.4% February gain that more than retraced a 0.1% 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.


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