Statistics Canada says manufacturing sales rose 1.9 per cent to $39.7-billion in June, partially reversing a 4.9-per-cent decline posted in May.

The agency attributes the increase to strong sales in the aerospace industry and a rise in the price of petroleum and coal products.

Constant dollar manufacturing sales rose 1.1 per cent in June, indicating that greater sales volumes were responsible for more than half of the increase in sales.

Sales rose in 12 of 21 manufacturing industries in June, representing 68 per cent of total sales.

Strength in the aerospace and petroleum industries was partly offset by lower auto sales.

Aerospace sales jumped 61.0 per cent to $1.6-billion, offsetting a 44.5-per-cent decline in May.

Canada’s Industry Strengths

• Advanced Manufacturing: Canada’s global share of the aerospace industry has tripled in the last 20 years, and it is the third-largest exporter of automotive products in the world.

• Agri-food: Canada is the world’s fourth-largest exporter of agricultural products.

• Chemicals: 10 out of 10 G7 top locations for chemicals manufacturing.

• Enabling Technologies: The Canadian Government has established a range of institutions and initiatives to create a supportive business environment for transformative technologies.

• ICT: The strongest growth in exports occurred in wired (+20.4%) and wireless (+16.9%) communications equipment.

• Life Sciences: The Canadian Government plans to double research and development (R&D) investments by 2010 to make Canada one of the five most research-intensive countries in the world.

• Plastics: Canada is the world’s fourth largest exporter of moulds and eighth largest exporter of plastics processing machinery.

• Wood Processing: Canada is the world’s leading producer and exporter of newsprint, and the world’s largest exporter of wood pulp.

Brett Gundlock/National Post

The reflation trade is on and that is good news for Canada, according to Gerry Brockelsby at Toronto-based Marquest Asset Management Inc.

Efforts by governments around the world have reached extreme levels, while some normal cyclical corrective forces are also coming into play, says the firm’s founding partner. While businesses continue to revise down their revenue projections, cut inventories and staff, and realign costs for a lower level of growth, he says it looks like the economy is not decelerating as fast as it was.

“What you’re seeing here is an escalation of policy to quite astounding levels. Our thinking is we’re finally at that stage where a lot of this stimulative policy initiative can start to bite.”

Brockelsby says Canada is in a good position to benefit from this because commodities should be one of the first areas to recover as all this money is put to work to stimulate the global economy.

“Only a year ago we were all talking about shortages of copper, oil and so on. That longer-term tight supply-demand situation has not gone away. When this market turns around and the economy starts to do better, the tightness for the commodity sector will come in very quickly.”

China is good at tying up supply when commodity markets are weak through building its strategic reserves and buying corporations. While this scenario is bullish for Canada and the loonie, he says, the limited amount of problems in the domestic financial sector also helps.

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The continued run of “less bad” economic data in the United States and Canada, such as Thursday’s drop in the U.S. trade deficit and return to a trade surplus in Canada, suggests the American economy may have performed better in the first quarter than many economists first thought.

“Things are still bad, but less bad than before, which is good in this environment,” said Sal Guatieri, a senior economist at BMO Capital Markets.

He said the narrowing in the U.S. trade deficit in February would likely cause forecasters to scale back their estimated declines for U.S. first quarter real gross domestic product before the advance reading is released by the Bureau of Economic Analysis on April 29. The market currently expects GDP to decline at an annualized pace of 5% in the quarter following a 6.3% plunge in the fourth quarter.

Charles Dumas, a director at Lombard Street Research said there was a good chance GDP would come in somewhere between 3%-4%. He said sharp job losses would suggest something to the contrary. However, Mr. Dumas said jobs do not precisely correlate with changes in GDP, and businesses appear to have pre-empted slow conditions by shedding jobs quickly. This has been evident in the “far from disastrous” fourth quarter corporate profit figures. As a result, expenditure, productivity, personal income and net exports, which have all performed relatively better in the recent data, would likely provide a more useful guide to economic activity.

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Canada posted an unexpected trade surplus in February, rebounding from two straights months of deficits, Statistics Canada said Thursday.

Factory sales in Canada posted their biggest decline on record in December, with the downturn affecting virtually every industry group and province, Statistics Canada reported Monday.

Manufacturing sales plunged 8% to $44.2-billion in December from $48-billion in November, the fifth consecutive month of falling values, and the worst since the federal agency began delivering the current series of data in 1992.

The downturn was considerably worse than the 5.3% drop that had been projected by analysts.

“Declines were widespread in December, as sales fell in 20 of 21 manufacturing industries,” Statistics Canada said.

“All provinces, with the exception of Prince Edward Island, posted lower manufacturing sales in December, ranging from a drop of 14.2% in both Nova Scotia and Saskatchewan to a 2.4% decrease in Manitoba.”

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Chris Wattie/Canwest News ServiceCanadian Auto Workers President Ken Lewenza speaks during a news conference on Parliament Hill in Ottawa, Feb. 10, 2009.

Union leaders were on Parliament Hill Tuesday pushing for the federal government to adopt a “Buy Canadian” policy before it rolls out its $40-billion economic stimulus package.

“We’re here today to insist that Canada needs comprehensive rules to ensure governments buy Canadian-made products and services, rules that will support Canadian manufacturing jobs, generate payroll and local spending and ultimately generate tax dollars that come back to the public purse,” Ken Lewenza, Canadian Auto Workers president, said at a news conference.

He said a ‘Buy Canadian’ policy would not violate NAFTA or other trade agreements, nor would it provoke a trade war.

“These arguments are completely false, raised as a smokescreen by those clinging to the rapidly failing ideology of endless free trade and de-regulation — the very ideas that got us in the mess today,” he said.

The CAW’s campaign comes amidst the ongoing controversy associated with the American government’s stimulus package that contained a “Buy American” provision. The plan stipulated that steel used in infrastructure projects must be made in the United States, which raised concerns about U.S. protectionism and trade agreement violations. The clause was later watered down to offset the controversy.

But Mr. Lewenza, joined at Tuesday’s new conference by the United Steelworkers national director Ken Neumann, said the unions are advocating for similar rules, which they say are not protectionist.

“At a time when our governments are poised to spend billions on much needed infrastructure we are calling on all levels of government to immediately enact comprehensive ‘Buy Canadian’ policies, to keep our tax dollars at home. At this time, we simply can’t afford not to,” said Mr. Lewenza.

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Canada’s share of vehicle production in North America is holding steady but may deteriorate in the years ahead because the country is too dependent on output by Detroit’s struggling automakers, according to an analysis by a leading consultancy.

Auto assembly factories in Canada last year cranked out just over 2 million vehicles, down nearly 1 million units from their peak in 1999.

Total output was the lowest year since 1992, falling 19.4% from 2007.

Canadian plants nevertheless pumped out about 16% of all auto output in the United States, Canada and Mexico, new figures from Richmond-Hill, Ont.-based DesRosiers Automotive Consultants show. Given that Canadian auto sales represent only 8% of the North American total, its manufacturing output remains healthy, said Dennis DesRosiers, president of the consultancy. Canada’s auto output jumped from 7.7% of North America’s new vehicles in the 1960s to 15.9% in the 1990s.

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Ontario, the heart of Canada’s auto sector, showed the most support, with 62 per cent in favour of the bailout and just 28 per cent opposed. The federal and Ontario governments announced on Dec. 21 they’ll provide $4-billion in loans to General Motors and Chrysler. Ottawa is contributing $2.7-billion and Queen’s Park will kick in $1.3- billion.

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