B.C. manufacturing: small but strong

B.C. manufacturing sales up 1.1%, Canada's down 1%

As month-to-month manufacturing sales fall in Alberta and the east, service industry heavy British Columbia see’s its small manufacturing sector thrive compared to the rest of the country.

“British Columbia saw a 1.1% increase in manufacturing sales, which is fantastic,” said Warren Kirkland, an economist at TD bank, in an interview. “That growth came from key sectors in B.C. like soft wood lumber production and Vancouver housing construction.”

May’s soft wood lumber sales were up 3.9% in British Columbia. Other sectors related to housing construction were also up in B.C. including concrete and cement product sales, up 7.2%, and wood door and window sales, up 6%. According to Kirkland, this was a result of increased housing construction in both Vancouver and the U.S.

The manufacturing picture for the rest of the country isn’t as sunny as it is on the west coast. Canadian manufacturing sales declined 1% in May, worse then the expected 0.8% decline. Not only was the sales dollar amount lower during May, but sales volumes were also down 2.1% from April.

“The Canadian manufacturing sales numbers for May was worse than it looked,” said Scotiabank economists in a note to investors. “This just adds an ugly Q2 for the Canadian economy.”

Kirkland however believes that this dip in manufacturing, though not great, is only temporary.

“A lot of these results are because of transitory factors,” said Kirkland. “Generally we’re thinking this is going to be a transitory dip and we should start to see it pick up next month.”

According to Kirkland, uncontrollable forces of nature interrupted production means and supply channels. Alberta petroleum and coal product sales fell 2.2% because of low production volumes caused by northern Alberta wildfires. Ontario’s auto industry was hit hard during the second quarter with vehicle sales falling 4.2% and auto parts sales falling 2.3%. According to Kirkland these declines were a result of a Japanese earthquake that disrupted supply.

British Columbia is less affected by fluctuations within its manufacturing sector than other provinces because the industry is relatively small, making up only 7% of the province’s Gross Domestic Product.