Factory sales strengthened in May as manufacturing activity ramped up after plants had scaled back or shuttered operations in April due to COVID-19. Total manufacturing sales in May rose 10.7% to $40.2 billion. May’s double-digit increase in manufacturing sales followed April’s record 27.9% decline. Four out of five manufacturing establishments reported that their activities in May were affected by COVID-19, while one-quarter of establishments reported that they have a recovery plan in place. Overall factory sales in May remained almost 30% below levels in February.

On July 13th, an agency study pointed to signs of economic recovery in transportation. With border closures and travel restrictions, itinerant aircraft movements (take-offs and landings) declined to just over 14,100 during the week of April 11th. Since reaching this low, movements have steadily increased to the end of June, driven by domestic flights, albeit with fewer passengers, as well as by more dedicated, but less lucrative air cargo, reflecting a surge in e-commerce sales. On the freight side, the amplitude was less severe as goods movement remained an essential service. System-wide, the number of railcars online reached a low of 126,400 during the week of May 9th. By mid-month, some non-essential businesses, including automobile manufacturers and parts suppliers, gradually resumed production. This resulted in the use of relatively more box cars and multilevel automotive cars in June by Canada’s mainline railways.

On July 14th, leading indicators were released on international arrivals by air and on cross-border travel volumes. At airports equipped with electronic kiosks for customs clearance, the number of international arrivals to Canada by air began to decline sharply following border restrictions in mid-March and then remained flat from April through to the end of June. On the ground, 64,200 US residents entered Canada in June through 111 land ports equipped with automated scanning devices, down 96% from 1.6 million in June of 2019. There were 136,400 Canadian residents who returned to Canada through these same ports—94% fewer than the 2.1 million recorded last June. Agreement to restrict the Canada-US border to essential travel is likely to be extended into late August.

Also on July 14th, Statistics Canada released new data from the Canadian Survey on Business Conditions for reference month May that highlighted how restrictions on social and economy activity have affected businesses as the economy begins to reopen. Nearly two-thirds of businesses expect the size of their workforce to remain the same over the next three months, while nearly one-third of businesses reported that at least 10% of their workforce was teleworking or working remotely at the end of May. The survey also provided information on the financial health of businesses. Eight percent of businesses reported that they would only be able operate at current revenue and expenditure levels for less than three months, before having to consider additional staffing actions, closure or bankruptcy. Among newer businesses, those that are two-years old or less, this figure rose to 14%.

The survey also found that nearly one-quarter of businesses that make rent or mortgage payments had their rent or mortgage payments deferred, while about 6% of businesses had their request to defer payments rejected. Three out of five businesses that make rent or mortgage payments had not asked or been offered the option to defer payments owed.

Source: Statistics Canada