Manufacturing sales held near record-high levels in May, propelled again by the stratospheric rise in wood-product prices.
Total factory shipments rose 1.2% to a seasonally adjusted $5.52 billion, which more than reversed April’s decline. Year-over-year sales were a stellar 43.8% higher than a year ago. Nationally, sales were down 0.6% from April, but up a similar 42.6% year over year.
May’s increase was largely driven by resource-oriented sectors, which were buoyed by improved global demand and housing markets.
Wood-product sales reached $1.73 billion, up 3.9% or $65 million, which was equivalent to the total gain in manufacturing sales for the month. This was the sixth straight monthly increase, and the 11th in 12 months. Year-over-year sales rose by 176%, driven by strong price gains and elevated demand for housing and renovations during the pandemic. Lumber and other wood-product prices surged 18% in May and were up 120% from same-month 2020.
Among other sectors, performance was mixed. Primary metal manufacturing rebounded sharply by 18% or $48 million after a steep April decline, while paper sales increased 6.1% or $24.7 million. Offsetting these gains were sharp declines in fabricated metal (9.4% or $26.3 million), machinery (7.2% or $20.6 million) and transportation equipment (7.9% or $15.5 million). Global semiconductor shortages may be factoring into broader manufacturing as supply chains are interrupted.
With the latest gain, year-to-date sales growth reached nearly 30%, marking the strongest start to a year on record. A more than doubling of wood products has accounted for two-thirds of the rebound. Firm global growth and commodity prices will keep manufacturing sales elevated, but a recent correction in lumber prices points to a declining trend in the second half of this year.
B.C.’s new-home construction posted a burst of activity in June. Total urban-area starts jumped to an annualized rate of nearly 62,000 units compared with an already robust 42,520 units in May. Growth reflected a surge in multi-family starts, which rose to an annualized rate of 54,200 units from 34,762 units in May, while detached starts held unchanged. B.C.’s largest urban markets all reported large gains in starts, with Metro Vancouver starts up 47%, Victoria up 84%, and more than doubling of starts in Kelowna and Abbotsford-Mission. Net starts in smaller urban markets were unchanged from May. •
Bryan Yu is chief economist at Central 1 Credit Union.
