October 15, 2021

Weekly EconMinute—Manufacturing activity in Alberta

In this week’s EconMinute, we’re talking about manufacturing activity in Alberta.

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Manufacturing has been a bright spot in Alberta’s economic recovery. While employment remains low compared to pre-pandemic levels, strong demand and elevated prices have helped boost the value of sales in commodity-driven industries.

New data show that output dipped in August and has been flat since May, but the sector had such a strong start to the year that it’s still on track to post record-level sales in 2021. Through August, manufacturing output is 30% higher than it was last year and 6.9% higher than it was in 2019.

Alberta’s manufacturing performance since the pandemic:

  • Since February 2020, Alberta has seen the fastest growth in manufacturing sales (14.9%) of any of Canada’s four largest manufacturing provinces.
  • A full half of that growth has come in food processing, which was only modestly impacted by the pandemic, but has since surged.
  • Food processing now accounts for almost one quarter of all manufacturing activity in Alberta, about the same share as petroleum refining which has historically been our most important manufacturing industry.  
  • Petroleum refining was hit hard by low oil prices in early 2020. It was only in August of this year that the current price rebound was enough to drive a full recovery in the value of refinery output.
  • Wood products have been another contributor to Alberta’s strong manufacturing performance. Buoyed by a spike in commodity prices, the value of wood products manufacturing in Alberta nearly tripled from February 2020 to May 2021. Since then, the value of output has declined considerably, but is still about 50% higher than it was pre-pandemic.
  • Chemical products have been another bright spot in Alberta. Output is up 11% since February 2020 and is poised to grow even further based on new planned investments and capacity coming online.
  • One weak spot is fabricated metals production, which is down 19% since early 2020. That industry is closely tied to investment in the energy sector which remains depressed compared to the mid-2010s.

Time will tell, but Alberta’s manufacturing landscape appears to be shifting. While petroleum refining remains critically important, strong growth in food processing and a burgeoning chemicals sector are helping to diversify manufacturing output in the province.

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