Canada’s manufacturing sector showed resilience in December 2024, with sales rising for the third consecutive month, signaling a stable recovery despite ongoing economic uncertainties. The total manufacturing sales reached $71.4 billion in December, reflecting a 0.3% month-over-month increase, supported by growth across several subsectors, particularly petroleum and coal, food products, and primary metals.
The petroleum and coal manufacturing subsector posted the largest increase, climbing 3.4% to $8.2 billion. This marked its third consecutive month of growth, though the gain was largely price-driven, as sales in constant dollars showed a slight decline of 0.9%. The ongoing rise in global energy prices, driven by geopolitical factors and supply chain disruptions, has been a primary factor fueling the gains in this subsector.
Food products also played a crucial role in December’s positive performance, with sales increasing by 1.9%, reaching $12.9 billion – the highest level seen since September 2023. The increase was driven by strong seasonal demand in various food categories such as grains, oilseeds, and meats. The food subsector’s continued strength was reflected in a 0.4% quarterly increase to $38.2 billion in the fourth quarter of 2024.
However, not all sectors were on an upward trajectory. Motor vehicle sales experienced a sharp 5.0% decline, falling to $4.5 billion in December, due to planned winter shutdowns at several auto assembly plants. Despite this drop, the automotive subsector showed resilience on a quarterly basis, with sales increasing by 5.0% in the fourth quarter, marking a return to growth after several months of stagnation.
Manufacturing sales were not uniform across Canada, with several provinces showing divergent trends. Quebec posted the most significant increase, with sales rising 2.2% to $18.8 billion, driven largely by gains in primary metals and petroleum and coal products. Primary metal production saw a remarkable 8.5% jump, supported by strong demand for non-ferrous metals. Conversely, Ontario experienced a decline in sales, down 1.3% to $30.6 billion, largely due to weaker performance in transportation equipment, including a 7.5% drop in motor vehicle sales.
Alberta also showed strong performance, with manufacturing sales climbing 2.5% to $8.7 billion, driven by substantial increases in chemicals, food products, and fabricated metals. This was the highest sales level since February 2024, indicating a solid recovery for the province’s manufacturing sector.
While manufacturing sales increased, inventories remained steady at $119.8 billion, showing no significant change from November. A slight rise in goods in process inventories offset declines in raw materials and finished products. The inventory-to-sales ratio remained unchanged at 1.68, suggesting that inventories are being well-managed relative to sales.
However, the manufacturing sector faced challenges in terms of capacity utilization. The rate dropped to 76.0% in December, down from 79.9% in November, reflecting lower production activity in key subsectors such as transportation equipment, food products, and primary metals. The decline suggests that some sectors are still operating below their full potential.
Despite the positive growth in December, the manufacturing sector’s performance in 2024 has been marked by volatility, with several external factors shaping the outlook. High interest rates and ongoing global economic uncertainties have posed challenges for manufacturers throughout the year. Overall, total sales in 2024 were down 2.1% compared to the previous year, driven primarily by declines in transportation equipment and petroleum products.
The motor vehicle industry, in particular, faced significant hurdles, with sales falling 11.1% to $55.1 billion, largely due to weak global demand and disruptions caused by the transition to electric vehicle production. Nonetheless, other segments, such as aerospace products, saw notable growth, with production surging 17.7% to a record $31.1 billion, buoyed by strong demand for aircraft and parts.