Manufacturing sales in B.C. rebounded in January to stay within the elevated range observed since October. Shipments reached a seasonally adjusted estimate of $3.51 billion – a 3.3% increase from December, with unadjusted sales up nearly 6% from year-ago levels.
January's monthly rebound was led by increased sales of fabricated metals (10.6%), non-metallic mineral products (19.2%) and machinery (5.4%). Wood products grew by a more modest 3% from December but, given that sector's large share of manufacturing output, represented 20% of the overall gain. With some commodities priced in U.S. dollars, a portion of the lift reflects conversion back to Canadian dollars.
While it is still early in the year, forestry-related manufacturing output is showing signs of a solid performance. Year-over-year gains in pulp and paper sales volume were more than 15%. Statistics Canada's recent capital investment survey suggests companies are investing heavily this year – possibly in anticipation of a more stable European outlook and demand from Asia. Meanwhile, following a sharp gain of 24% in 2013, reflecting both higher prices and quantities, solid-wood product manufacturing was up 10% year-over-year in January – a trend that should continue with U.S. housing market improvements. Machinery manufacturing also strengthened and was up 5% to start the year.
B.C. manufacturing is forecast to be a growth sector for the economy over the next few years. While incoming data might slow insofar as the recent trucking strike affecting Port Metro Vancouver has disrupted supply chains and export activity, an improved economy and favourable exchange rate are expected to drive growth in pulp and paper output following years of weakness, and there will be an upshift in manufactured foods. The completion of Rio Tinto's aluminum smelter should lift metal output by 2015, while machinery manufacturing will benefit from export and domestic demand. The latter will reflect demand generated from the start of major projects later in the decade.
