Despite a slight decline in the overall manufacturing sector in February, Canadian wood products manufacturing demonstrated resiliency in March 2023. According to Statistics Canada, the capacity utilization rate of the wood product manufacturing industry was 80.8% in March 2023, a significant rebound from 76.8% in February 2023. However, this represents a decrease when compared to the same period last year, where the rate stood at 85.6%.
Canada's lumber exports drop 5% in Q1, while shipments to China surged 116% and those to the U.S. decreased by 7.3% year-on-year, according to Lesprom Amalytics.
The wood product manufacturing industry's performance is part of a broader context of mixed results in Canadian manufacturing. Total manufacturing sales increased 0.7% to $72.3 billion in March, with motor vehicle, aerospace product and parts, and primary metal industries leading the growth. However, sales in the petroleum and coal product industry saw a decline of 2.0%.
Inventory levels also saw a 0.5% increase in March, driven largely by the computer and electronic product and primary metal industries. Meanwhile, the value of unfilled orders declined by 2.2% to $106.2 billion, primarily due to decreases in the aerospace product and parts and machinery industries.
Overall, the Canadian manufacturing sector is showing signs of recovery and growth, with certain industries, including wood product manufacturing, showcasing their resilience in the face of fluctuating market dynamics. Analysts predict lumber demand in North America to decline by 6-7% in 2023, with the first half of the year being the most troublesome.
