Transportation and warehousing growth outpaces economy

Growth in the transportation and warehousing sector outpaced the growth of the Canadian economy overall in April, the latest Statistics Canada survey of economic activity indicates.

Gross Domestic Product (GDP) in the transportation and warehousing sector grew by 0.5% in April, compared to a 0.1% reported growth for the economy overall.

This marked the second straight month that growth in transportation and warehousing had surpassed the growth of Canadian economy. In March transportation and warehousing GDP grew by 1.2% compared to 0.8% growth for all Canadian industries combined.

In part the growth in transportation and warehousing is fed by continuing boom in industrial production. Activity in the mining, manufacturing and utilities industries increased 0.3%, the sixth increase in the last twelve months, as higher mining and utilities output more than compensated for the weakness in the manufacturing sector. In comparison, the US index of industrial production increased 0.8%, the ninth increase in the last twelve months as all components registered gains.

The mining and oil and gas sector bounced back from two consecutive monthly declines as higher energy prices propelled the extraction and exploration of oil and gas. Production of oil and gas increased 1.8% in April and is 4.7% higher than last year’s levels. Near record oil and gas prices combined with the need to maintain current production levels bodes well for the drilling and rigging industry.

However, manufacturing contracted 0.2% in April after jumping 1.6% in March.

Primary metal manufacturing contracted 2.2% in April as iron and steel pipe production plummeted 9.2% and iron and steel mills and foundries shrank 6.2% and 4.0% respectively.

The slowdown of 2.2% in information and communication technologies product manufacturing and 0.4% in machinery manufacturing was partially offset by gains in wood products of 1.3% and non-metallic mineral products of 1.0%.

The paper industry declined 1.0% in April. This decline was mainly due maintenance shutdowns at a number of mills and to some extent the strength of the Canadian dollar.

Veneer, plywood and engineered wood product manufacturing industry increased 3.9% while sawmills and wood preservation improved 1.3% as the housing market in Canada and the US remained strong.

Gains in the chemical and non-metallic mineral industries helped balance manufacturing losses. Pesticide, fertilizer, and other agricultural chemical manufacturing was up 3.1% as conditions in the fertilizer industry continued to improve – the world’s grain inventories as a percentage of consumption are reaching the lowest levels on record.

Cement and concrete products manufacturing rose 2.8% reflecting strong domestic and foreign demand. Laminated plastics were also up a significant 4.6%.

Seafood manufacturing declined 2.4%, as lower lobster stocks reduced the number of processing licences issued on the east coast and low product prices kept shrimp fishermen on shore.

Tobacco production fell a further 2.6% in April due to upcoming closures and high levels of inventories.

Output at wineries grew 4.7% in April as new product lines were introduced to the market and the exports of Canadian ice wine to the United States grew.