The transportation equipment market is still doing well despite a slowdown in manufacturing overall. PHOTO courtesy Ford.
Manufacturing output contracted 0.6% in August, the third straight monthly decline.
“As a result, GDP in August was no larger than in February 2020, implying that the sector has not really grown over the last three-and-a-half years. Unfortunately, many of the headwinds that have buffeted the sector in recent months are expected to persist into 2024, particularly high interest rates and a slowing global economy,” comments Alan Arcand, chief economist with Canadian Manufacturers & Exporters.
Output was down in 11 of 20 major manufacturing subsectors in August with fabricated metal product output down -2.3%.
There is good news for metal manufacturers serving the transportation equipment sector however. Motor vehicles and parts output was up marginally, and other transportation equipment manufacturing jumped 11.1% in August, the fourth increase in five months.
Manufacturing’s slowdown reflects the overall Canadian economy, which remained stagnant in September with GDP remaining unchanged for the second consecutive month.
“There is no doubt that the Canadian economy is struggling, weighed down in recent months by factors such as persistent inflation, high interest rates, labour disruptions, and wildfires,” Arcand says. “In fact, real GDP growth is on track to edge down by 0.1% in the third quarter, following a 0.2% drop in Q2. In other words, Canada’s economy appears to have entered a technical recession, defined as two consecutive quarters of declining GDP.”