CANADA'S LEADING INFORMATION SOURCE FOR THE METALWORKING INDUSTRY

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CANADA'S LEADING INFORMATION SOURCE FOR THE METALWORKING INDUSTRY

CANADA'S LEADING INFORMATION SOURCE FOR THE METALWORKING INDUSTRY

Manufacturing down for second time in three months

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Manufacturing is having a tough start to the year, despite growth in the overall economy. PHOTO courtesy ANCA.

Manufacturing output contracted 0.4% in February, down for the second time in three months. To make matters worse, Statistics Canada’s advance estimate signalled that manufacturing activity decreased again in March.

“Taking a longer-term view, manufacturing output has decreased by 1.4% over the past 12 months,” comments Alan Arcand, chief economist with Canadian Manufacturers & Exporters. “The sector continues to be weighed down by several headwinds, including structural workforce challenges, an uncertain business environment, and high interest rates.”

The auto sector had a tough month, as motor vehicle and parts manufacturing decreased 2.9% in February. This was the fifth decline in seven months, as shutdowns for retooling activity continued to impact production.

On the positive side of the ledger, machinery manufacturing expanded 2.5% in February, up for the third time in four months. Two subsectors drove the gains: agricultural, construction and mining machinery manufacturing and other general-purpose machinery manufacturing.

Looking at the economic picture across all industries, real GDP rose 0.2% in February, following a 0.5% increase in January.

“Looking ahead, a preliminary estimate points to a flat reading in March. Put together, real GDP growth in the first quarter is on track to grow by a solid 2.5% on an annualized basis. However, with the economy losing momentum as the quarter progressed, the stage is set for weaker growth in Q2,” notes Arcand. “This supports expectations that the Bank of Canada will start to gradually reduce interest rates in June or July.”

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