Accelerated Growth in Canadian Manufacturing for 2023

A recent S&P Global survey revealed how supply-chain conditions are improving into 2023 and has been the greatest advancement in lead times since May of 2009. The index recorded posted 47.3 in February, which was up slightly from 46.9 in January. This data displayed that growth increased on building modest gains since the beginning of 2023. Manufacturing has continued to add new job opportunities to their plants which brought great confidence to business leaders and their employees. Inflation rates seem to be easing as supply chains are having greater stability.

Job availabilities are higher than before the pandemic, even with a decline of 8.7 percent to 75,000 in 2022’s third quarter. The vacancies were actually doubled since 2017 and almost five percent of manufacturing roles were available at the end of 2022. Dennis Darby, president and CEO of CME Group said that last year highlighted Canada’s manufacturing sector’s resilience despite issues with supply chains, rising inflation costs, and labour and skills gaps. Last year’s revelations foreshadowed what was to come for early 2023.

“February’s data provided a relatively positive set of data concerning the health of the Canadian manufacturing economy. Growth rates for a range of variables improved, most notably for output and new orders amid reports of firmer market demand,” said Paul Smith, economics director at S&P Global Market Intelligence. “Lower inflation was also seen as a supportive demand factor, and firms themselves experienced a drop of cost inflation since the previous month to a multiyear low. Amid signs of more stability in supply chains, these factors all helped to support an improvement in confidence over the month and partly explained another round of job creation in the sector.”

Last week, the Bank of Canada decided to keep its interest rate at 4.5 percent. This marks the first time in over a year that the bank has decided not to raise the interest rate. Wages also continue to increase by four to five percent which can lead to some relief from the weak economic growth. If inflation costs were to rise, this would negatively impact manufacturing by causing higher consumer costs. ‘”[The bank] will continue to assess economic developments and the impact of past interest rate increases, and is prepared to increase the policy rate further if needed to return to the two per cent inflation target,” the Bank of Canada said.