There was more good news for the Canadian economy Tuesday as Statistics Canada reported that Canadian manufacturing continued to pick up steam in April.
The agency said shipments rose 0.5% to $48.5 billion. That was slightly below the 1% increase expected by the market, but economists noted that March’s strong increase was revised even higher to 4%, while April’s improvement extends the string of consecutive shipment gains to five months — the longest since the booming late 1990s.
“Despite concerns that Canada’s strengthened dollar and the recent boom in petroleum prices would undermine the manufacturing sector, manufacturers have put in a stellar performance during the first four months of 2004,” StatsCan said in a release. “Year-to-date shipments were up 3.1% compared with the same period in 2003, with much of the strength coming from the big-ticket, durable goods sector.”
A good sign of shipments to come, manufacturers reported a 2.6% increase in unfilled orders to $37.3 billion in April. This is the fourth increase in a row and the longest string of consecutive increases since 1999, the agency said.
BMO Nesbitt Burns Inc. chief economist Sherry Cooper said the results defied the “doomsayers.”
“Canadian manufacturing has adapted quite well to the surge in the Canadian dollar since the start of last year,” Cooper said in a report. “Manufacturing shipments have risen 7% in the past year and new orders have been even stronger at +11.6% year-over-year. The reason for the healthy performance is little mystery — domestic factories are responding to the powerful upswing in U.S. activity..”
Carl Gomez at RBC Financial Group, said today’s manufacturing numbers along with last week’s stellar merchandise trade report “shows that Canada is benefiting from the strong recovery emerging both south of the border and globally.
“Indeed, growth in the second quarter is shaping up to be very strong, with solid contributions from both the domestic and external sides of the economy. This will not only get the Bank of Canada revising up its view on growth, but also mulling over when its next move on interest rates will be. For now, we think the first tightening move will be in October,” Gomez said in a report.