Canadian manufacturing sales surged to record level in second quarter, despite tariffs

Manufacturing sales in Canada climbed in the second quarter of 2026 for the fourth quarter in a row, another sign that the Canadian economy rebounded after a sluggish start to the year.

The data, published on Friday, showed manufacturing sales rose by 9.3 per cent to $235.1 billion in the second quarter of 2026, the highest level on record.

Petroleum and coal products — which rose by 33.7 per cent during — led the gains, followed by transportation equipment sales, which rose by 14.7 per cent. Miscellaneous manufacturing sector sales declined the most (14.9 per cent) in the second quarter.

If sales of petroleum and coal products were excluded, sales rose by 6.1 per cent.

On a monthly basis, sales edged by 0.1 per cent to $78.8 billion in June, the fifth consecutive month of gains, led by gains in the chemical and transportation equipment sectors.

Gains were also broad based, with 15 out of 20 subsectors rising in June. Manufacturing sale volumes also rose by 4.2 per cent on a year-over-year basis in June.

However, a sharp decline in petroleum and coal product sales offset June’s gains, the largest decline after three consecutive monthly increases.

The report came after the Bank of Canada projected second-quarter economic growth of 2.5 per cent in its latest Monetary Policy report, a rebound after two consecutive quarters of negative growth. Economists also believe the Canadian economy grew in the second quarter.

“Another broad-based rise in manufacturing sales in June poses upside risks to an already punchy second-quarter GDP estimate and, paired with recent strength in the labour market, leaves soft core inflation as the last bastion for our call that the Bank of Canada will delay rate hikes until 2027,” wrote Bradley Saunders, North American economist at Capital Economics, in a note on Friday morning.

The manufacturing sales data come five days before U.S. President Donald Trump ‘s new 50 per cent tariffs are set to take effect, a move he said was in response to “Canada’s discriminatory treatment of U.S. commerce.” The U.S. administration said the levies were retaliation against Canadian tariffs and quotas on dairy, automobiles and alcohol.

Canada-U.S. Trade Minister Dominic LeBlanc and Chief Trade Negotiator Janice Charette were in Washington, D.C., this week meeting with U.S. Trade Representative Jamieson Greer, but no deal had been reached as of Friday afternoon.

June manufacturing sales were strong in some sectors that were hit hardest by existing U.S. tariffs. Sales of motor vehicle parts rose by 6.2 per cent on a month-over-month basis in June, while sales of motor vehicles rose by 0.1 per cent. Sales of wood products also rose by 5.1 per cent.

On a year-over-year basis, motor vehicle part sales rose by 12.8 per cent and motor vehicle sales rose by 20.9 per cent. Wood product sales, however, declined by 3.2 per cent.

“Sales of motor vehicle parts and wood products also rose strongly, and will continue to do well if Ottawa successfully lobbies for some reduction in the Trump administration’s Section 232 tariffs, as media reports are suggesting,” Saunders wrote.

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