OTTAWA – Canadian manufacturing sales rose more than expected in April, but economists cautioned the gain is likely temporary due to the disruption caused by the Alberta wildfires in May.
Statistics Canada says manufacturing sales rose 1.0 per cent to $50.4 billion in April, the first increase following two consecutive months of declines.
Economists had expected a gain of 0.6 per cent from March, according to Thomson Reuters.
The Alberta forest fires that destroyed parts of Fort McMurray in May are expected to be a significant drag on the economy with many predicting a contraction for the second quarter.
Royal Bank senior economist Nathan Janzen said the shutdown of close to 50 per cent of Canada’s non-conventional oil production due to forest fires and the evacuation of Fort McMurray, Alta., will weigh on May and June.
“We nonetheless continue to expect an increase in overall GDP in April after consecutive declines in February and March that in turn retraced much of a large jump in activity in January,” Janzen wrote in a commentary.
He added that April’s improvement will be temporary and RBC estimates GDP will decline 1.0 per cent on an annualized rate in the second quarter before it rebounds to a four per cent rate in the third quarter as activity in the region resumes.
In its monthly survey of manufacturing for April, Statistics Canada said the 1.0 per cent increase was due to higher sales in the petroleum and coal product, transportation equipment, and primary metal industries.
Sales in the petroleum and coal product industry gained 8.3 per cent to $4.1 billion in April, following a 13.4 per cent increase in March.
Meanwhile, transportation equipment sales increased 2.1% to $11.0 billion, helped by a 6.3 per cent gain in the aerospace products and parts industry which totalled $1.7 billion.
Sales increased in 10 of 21 industries, representing 55 per cent of Canadian manufacturing sales.
In constant dollar terms, sales were up 1.4 per cent, indicating a higher volume of manufactured goods were sold in April.
Sales were up in six provinces, with Alberta, Quebec and Ontario posting the largest gains.
Alberta gained 3.5 per cent to nearly $5.1 billion, helped by the a 19.6 per cent increase in petroleum and coal products.
Quebec increased 1.4 per cent to $11.6 billion, driven by an 11.2 per cent increase in the aerospace product and parts industry, while Ontario climbed 0.4 per cent to $24.9 billion due to higher sales in the primary metals industry.