Skip to main content

Canadian manufacturing, back on track?

Once again, a month does not a trend make.  It is often forgotten that although manufacturing is a smaller percentage of Canada’s GDP (than it was just 5 years ago) it is still an important component (around 13% of GDP), and about 15% of Canada’s export (granted a good portion of that are cars destined to the U.S. market).

Nevertheless, Canadian’s manufacturing performance, in light of the strong CAD, is impressive.  So when the CAD was at its highest level manufacturing exports rose by almost 2%, reversing the sales losses of February.  I am looking forward to Canadian productivity numbers (especially those that strip out the service industry) to see if once again, despite the absence of Canadian industrial policy, Canada’s manufacturing sector found its own way to increase productivity (without the ineffectual hand of various levels of government).  

(source: StatsCan)

The increase was across the board (transport equipment +6.3% was half the total gain).  Overall 15 of 21 segments saw increase in sales.  On the other side of the equation, inventories rose in line with sales.  Two sectors saw out of proportion inventory increases: energy segment (+21%), and in fabricated metals (+6.3%).  Order backlog has risen again, indicating that Canadian companies are still doing well in a strong CAD environment.  It does beg the question, [Note; for some reason inventory levels include raw material stocks in the energy sector (Coal/oil/gas), hence the inclusion in the discussion here]

One question which begs to be asked is if oil prices are rising (were rising actually) why are stocks also rising especially since the oil & gas complex is in backwardation?  Could the comments from the Saudi oil minister be correct, and could the recent increase in oil prices (via the futures contract market) are in the grip of speculators?  There is no doubt that the recent increase in margin requirements took the “sail out” of the energy market, an indication as to how frothy the future market was, since traders could not afford the additional margins (a function of increased volatility BTW, and little else).  Today, oil is trading around $97 – 15% below its $114 peak.  [Ok end of RANT on investor speculation on the futures market for energy/metals etc]

Overall, it would seem to be a good report for Canada – don’t know what the “pros” will make of this.  One inescapable fact is that Canadian manufacturing industry (that has survived) has been able to thrive in an environment of a strong CAD.

Popular posts from this blog

Ok so I lied...a little (revised)

When we began looking at farming in 2013/14 as something we both wanted to do as a "second career" we invested time and money to understand what sector of farming was profitable.  A few things emerged, First, high-quality, source-proven, organic farm products consistently have much higher profit margins.  Secondly, transformation accounted for nearly 80% of total profits, and production and distribution accounted for 20% of profits: Farmers and retailers have low profit margins and the middle bits make all the money. A profitable farm operation needs to be involved in the transformation of its produce.  The low-hanging fruits: cheese and butter.  Milk, generates a profit margin of 5% to 8%, depending on milk quality.  Transformed into cheese and butter, and the profit margin rises to 40% (Taking into account all costs).  Second:  20% of a steer carcass is ground beef quality.  The price is low, because (a) a high percentage of the carcass, and (b)...
Post a Comment
Read more

Spray painting Taylor Swift G650 aircraft (updated)

 First, a bit of paint will not harm anyone.  These climate activities are going to learn two things in the next few days:  (1) Trespassing at an airport is a felony almost anywhere in the world.  That means criminal prosecution.   (2) removing paint from an aircraft is expensive.   So these climate activists are about to find out the reach of the British criminal system and it will not be pleasant, the UK has very strict laws about that, I would be surprised if cleaning the aircraft of all the paint will cost less than $100,000.     I am sure that when they planned (premeditation) this little show they had a very valid logic to doing this.  Tonight, they are probably realizing the depth of their troubles.   I understand that in the UK it's a minimum one-year jail sentence.    Also, good luck travelling with a criminal trespass charge against you.  I am relatively certain that the airline industry will ...
Post a Comment
Read more

Janet Yellen from China supporter to Hawk...

There is rarely serious news in the world these days, it seems that most newspapers are filled with headlines and little else, and then Ms Yellen went to China.  Secretary Yellen has long been known in the Biden administration as the voice of moderation when dealing with China, yet as her trip which concluded yesterday a hawk was born:  She warned the Chinese against dumping goods in the United States.    fighting words! The American administration is very concerned about the lack of Chinese domestic consumption.   Even before the COVID-19 epidemic, there were already the beginning signs of a slowdown, automobile sales were off.   China is facing domestic deflation (a clear sign of collapsing demand) China imports few consumer goods, they import raw materials and intermediary goods.   It seems that the American administration is concerned that the Chinese administration will dump consumer goods abroad to keep its manufacturing machinery ...
Post a Comment
Read more