Canadian manufacturing rebounds, but for how long?

Canadian manufacturing sales rebounded in February, rising 3.6% to $71.2 billion after a sharp decline in January, as a recovery in transportation equipment and stronger machinery and primary metal sales helped lift the sector, according to new data from Statistics Canada.

The increase followed a 3.1% drop in January and was broad-based, with sales rising in 12 of 21 subsectors. In real, or constant-dollar, terms, manufacturing sales were up 3.4% in February, while total sales remained 1.7% below the level recorded a year earlier. Statistics Canada said the February rebound was led by transportation equipment, where sales jumped 18.8% to $10.6 billion after an 18.4% decline the previous month.

The transportation equipment gain was driven largely by a recovery in Ontario auto production as several assembly plants ramped up operations after planned maintenance and retooling shutdowns in December and January. Motor vehicle sales surged 43.4% to $3.7 billion, while motor vehicle parts sales rose 9.9% to $2.7 billion. Exports of motor vehicles and parts also climbed 30.2% in February. Despite that rebound, transportation equipment sales were still 10.2% lower than in February 2025.

Other sectors also contributed to the monthly increase. Machinery sales rose 7.7% to $4.6 billion on higher prices and volumes, while primary metal sales climbed 4.9% to a record $6.5 billion, supported by strong demand for non-ferrous metals. By contrast, chemical product sales fell 3.2% to $5.0 billion, their lowest level since July 2025, with declines in basic chemicals as well as pharmaceutical and medicine products.

Provincially, Ontario posted the largest gain, with manufacturing sales rising 7.5% to $30.5 billion after a 7.4% decline in January. Quebec followed with a 2.4% increase to $19.0 billion, helped by gains in primary metals and aerospace products and parts. Alberta recorded the largest provincial decrease, with sales falling 2.5% to $8.5 billion, led by declines in petroleum and coal products and chemicals.

The report also pointed to improving demand conditions. New orders rose 6.7% to $73.8 billion, while unfilled orders increased 2.3% to a record $117.6 billion, driven mainly by aerospace products and parts. Inventories edged up 0.6% to $121.9 billion, but the inventory-to-sales ratio fell from 1.76 in January to 1.71 in February, suggesting goods were moving more quickly relative to stock levels.

Meanwhile, the manufacturing sector’s capacity utilization rate rose from 75.4% in January to 77.1% in February. The most notable increases were recorded in transportation equipment, wood products, and machinery, indicating stronger operating activity across several key industries. Even with the monthly recovery, however, the overall picture remained mixed, with total manufacturing sales still below year-earlier levels and some major subsectors continuing to face pressure.