Strong sales in the aerospace and petroleum and coal products industries boosted Canadian manufacturing sales in June, Statistics Canada said Friday.

Manufacturing sales increased 1.9% to $39.7 billion in June, partially reversing the 4.9% decline posted in May.

Excluding aerospace, petroleum and coal products, Canada’s manufacturing sales would have decreased 0.5%.

“Constant dollar manufacturing sales rose 1.1% in June, indicating that greater sales volumes were responsible for more than half of the increase in sales,” StatsCan said.

Economists at RBC Economics Research said the stronger-than-expected sales growth is a promising sign for the economy.

“The recovery in manufacturing sales in June and steady employment points to a revival in economic activity in the final month of the second quarter following May’s 0.5% drop in real GDP,” said Dawn Desjardins, assistant chief economist at RBC Economics Research. “The contraction in real GDP in the second quarter will likely be more moderate than the first quarter’s 5.4% drop by our reckoning.”

Production in the aerospace industry increased 61% to $1.6 billion, partially reversing a 44.5% decline in May.

Sales in the petroleum and coal products industry rose 6.9%, reflecting higher prices for petroleum products. In addition, several refineries increased production in June.

Non-metallic mineral products (+5.6%), furniture and related products (+4.9%), wood products (+3.5%) and food (+1.4%) were other industries reporting sales increases in June.

The motor vehicle manufacturing industry was the main offsetting industry in June. Sales decreased 6%, following a 20.8% drop in May. The recent weakness reflected several plant shutdowns. In contrast, motor vehicle parts manufacturing edged down 0.1% in June.

New orders surged 18.4% in June, the largest gain on record, primarily due to strength in aerospace. But the auto sector likely saw some increased order activity as well, as production prepared to come back online in July, according to Robert Kavcic, economist at BMO Captial Markets.

“With the auto sector coming back on stream and global demand conditions improving, relatively better days likely lie ahead for Canadian manufacturers,” Kavcic said.

New vehicle sales slip in June

Separately, StatsCan reported that new motor vehicles sales edged down 0.6% to 119,961 units in June.

Most of this decrease was attributable to lower sales of passenger cars.

Preliminary industry data indicate that the number of new motor vehicles sold increased by about 5% in July.

IE