Workers are seen at Bri-Steel Manufacturing, a manufacturer and distributer of large diameter seamless steel pipes, in Edmonton, Alberta, Canada June 21, 2018. All 21 industries monitored by Statistics Canada reported declines in April, while over four-fifths of manufacturers said the coronavirus pandemic had affected their operations. (Candace Elliott/REUTERS)

Canada April factory sales plummet record 28.5% but May data should improve

Canadian manufacturing sales plummeted by a record 28.5 per cent to $36.4 billion in April, following a 9.8-per-cent decline in March, as the COVID-19 pandemic ground much of Canada’s economy to a halt, the country’s national statistics agency reported Monday.

Analysts in a Reuters poll had forecast a decline of 20 per cent in April.

Sales were down in all 21 industries, led by sharp declines in the transportation equipment and petroleum and coal product industries, Statistics Canada reported.

In volume terms, manufacturing sales plunged by a record 26 per cent, indicating that a much lower volume of products was sold in April, the data agency said.

“This is a much deeper hole than initially expected, and could take even longer for the sector to dig out of than initially expected,” CIBC Senior Economist Royce Mendes said in a note to clients.

Statistics Canada reported that over 85 per cent of establishments in the manufacturing sector reported that their activities were impacted by COVID-19. The manufacturing sector as a whole was operating at just 56 per cent capacity.

Ford Edge vehicles stand on a production line at the Ford Assembly Plant in Oakville, Ont., on Thursday, February 26, 2015. Sales in the transportation equipment industry fell by over three-quarters to $1.9 billion in April, the largest decrease on record, Statistics Canada said. (Chris Young/THE CANADIAN PRESS)

Sales in the transportation equipment industry fell by over three-quarters to $1.9 billion in April, the largest decrease on record, the report said.

This plunge was led by sharp declines in the motor vehicle and motor vehicle parts industries, which plummeted by 97.5 per cent and 88.1 per cent respectively.

“Every Canadian assembly plant ceased operations in April, while many motor vehicle parts suppliers in North America operated at limited capacity or closed operations completely,” the report said.

Auto manufacturing restarted in May but output was still about three-quarters lower than a year earlier. Petroleum manufacturing was also down sharply thanks to a combination of low prices and reduced demand for gasoline as many Canadians stayed home or worked from home.

“Like many sectors, April should prove the low point for Canadian manufacturing as easing of physical distancing measures allowed some factories to reopen or increase capacity,” said Josh Nye, senior economist with RBC.

While the number of hours worked rose 11 per cent in May after a 24 per cent decline in April, “a swift rebound isn’t likely,” Nye said.

With files from Reuters 

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