Key Takeaways:
Canadian manufacturing shipments rose for a third straight month in April, driven by surging oil prices as geopolitical tensions in the Middle East disrupted energy markets.
Canadian factory shipments climbed an estimated 4.6% in April from March, extending a three-month recovery as surging oil prices boosted the petroleum and coal segment, Statistics Canada said Tuesday. The preliminary estimate, based on a weighted response rate of roughly 72%, points to the strongest monthly gain since early 2025.
"The largest increase in April sales was again in the petroleum and coal segment," the national statistics agency said. The sector has been the primary driver of factory sales growth since the Iran conflict disrupted energy markets and pushed crude prices sharply higher.
The April advance followed a revised 3% gain in March that lifted manufacturing shipments to their highest level in more than a year, before manufacturers faced headwinds from US trade policy uncertainty. In volume terms, March sales rose a more modest 1%, suggesting price effects accounted for much of the headline increase. The S&P Global Canada manufacturing purchasing managers' index climbed to 53.3 in April from 50 in March, with survey respondents citing concerns about future product availability and price increases caused by the Iran conflict.
The data shows Canada's factory sector benefiting from the energy price shock even as other industries grapple with US tariff uncertainty and slowing global demand. Wholesale trade, a separate gauge of business activity, edged up an estimated 0.1% in April — a third straight monthly increase but well below March's 1.9% pace. Statistics Canada will release the official manufacturing survey results, based on more complete data, on June 15.
Petroleum and coal drive three-month streak
The petroleum and coal segment has now driven manufacturing sales growth for three consecutive months, reflecting how Canada's status as a major energy producer has insulated parts of its industrial base from the broader economic drag caused by the Iran conflict. Brent crude has traded above $90 a barrel for most of the second quarter, with prices briefly touching $99 in late May before retreating after reports of potential peace negotiations between the US and Iran.
The manufacturing recovery comes as Canadian producers navigate an uncertain trade environment. US tariff policy has created headwinds for exporters outside the energy sector, with the Bank of Canada warning that prolonged trade uncertainty could weigh on business investment. The central bank held its benchmark rate at 3.75% at its May meeting, citing elevated inflation risks from higher energy costs that complicate its policy path.
Factory activity expands after March stall
The S&P Global survey data suggests the manufacturing expansion has momentum heading into the second quarter. The index's rise above the 50 threshold separating expansion from contraction marked a recovery from March, when the reading slipped to the neutral level. Production and new orders both increased in April, the survey showed, as manufacturers accelerated purchasing to hedge against further price increases.
The Canadian dollar strengthened against the US dollar in recent sessions as optimism around a potential US-Iran peace deal boosted risk appetite, though fresh US strikes on Iranian targets Monday tempered those expectations. The loonie traded at 95.23 per US dollar on Monday, up 46 paise from Friday, after touching its weakest level in weeks earlier this month.
This article is for informational purposes only and does not constitute investment advice.
