In August 2024, Canada’s manufacturing sales declined by 1.3% month-over-month to $69.4 billion, slightly outperforming the anticipated 1.5% drop but marking the lowest sales figure since January 2022. This decline underscores ongoing challenges in the country’s manufacturing sector, as reduced activity in key industries weighed on overall performance.

Key Drivers Behind the Decline

The downturn was largely driven by significant drops in primary metals, where sales plunged by 6.4%, and in petroleum and coal products, which fell by 3.7%. The primary metals industry, closely tied to global commodity prices and demand, experienced a notable slowdown, while reduced demand for petroleum and coal products reflected lower energy prices and shifting consumption patterns.

Aerospace and Wood Products Provide Support

Despite the broader decline, certain sectors saw strong performance, particularly aerospace products and parts, which surged by 7.3%. This growth reflects increased demand for aerospace components, likely driven by a rebound in global air travel and defense spending. Similarly, wood products posted a solid gain of 3.8%, benefiting from continued demand in construction and housing, even as other areas of the economy faced headwinds.

Regional Disparities in Sales

Regionally, the sales decline was widespread, affecting eight provinces, with Alberta leading the losses at -3.3%, followed by Ontario with a 0.6% drop. The slump in Alberta, a key producer of energy and raw materials, mirrors the slowdown in the petroleum and primary metals sectors. Ontario, home to Canada’s largest manufacturing base, also saw declines, albeit less severe, as the province’s diverse manufacturing industries experienced uneven demand.

In contrast, Prince Edward Island bucked the trend, recording the highest sales growth at 2.3%, likely driven by smaller but resilient industries such as food processing and agricultural products.

Year-on-Year Performance

On a yearly basis, manufacturing sales in Canada fell by 4.4%, highlighting ongoing challenges in the sector, including weakened global demand, fluctuating commodity prices, and slower economic growth in key trading partners like the U.S. and China.

Outlook for Canada’s Manufacturing Sector

While the aerospace and wood products sectors show resilience, the overall outlook for Canada’s manufacturing sector remains cautious. With sales at their lowest level since January 2022, the sector faces headwinds from weakening global demand, particularly in energy and raw materials. Policymakers and industry leaders will be watching for any signs of stabilization or further declines in the months ahead, especially as the broader economy navigates uncertainties in the global market.