OTTAWA — A recent surge in manufacturing sales during July may signal the beginnings of a recovery for a sector battered by tariffs, according to economist Thomas Ryan of Capital Economics.

Statistics Canada reported that manufacturing sales increased by 2.5% to $70.3 billion, driven primarily by a strong performance in the transportation equipment subsector.

Sales of transportation equipment saw a remarkable rise of 8.6%, reaching $11.4 billion. This boost was fueled by an 11.4% jump in motor vehicle sales and a 7.2% increase in parts sales. Additionally, sales of aerospace products climbed by 6.5%.

Ryan noted these figures indicate 'tentative signs of a recovery' in two sectors that were significantly impacted by the imposition of U.S. tariffs. This follows an encouraging 0.3% increase in June, marking consecutive monthly gains.

The economist emphasized that sales in primary and fabricated metals rose by 4% month-over-month, indicating that these subsectors may finally be moving past their hardest times induced by the tariffs.

Earlier this year, U.S. President Donald Trump implemented a 25% tariff on steel and aluminum imports, which was later doubled. The Canadian government responded with counter-tariffs on steel, aluminum, and automotive products, which are still active as negotiations continue.

Additionally, the petroleum and coal products subsector experienced a 6.2% sales increase, totaling $7.2 billion in July.

On a constant dollar basis, manufacturing sales reflected a 1.6% gain month-over-month.

Furthermore, a separate report revealed wholesale sales (excluding petroleum and hydrocarbons) also rose by 1.2% to $86 billion, with sales volume up by 0.8%.

Despite these signs of recovery, Ryan cautioned that the rebound may be gradual, especially given the 2.2% decline in new orders and concerning indicators from the S&P Global Manufacturing Purchasing Managers’ Index, which indicates contraction.

Year-over-year, total manufacturing sales still lagged behind by 1.7%, highlighting the challenges that remain.

This evolving situation suggests a potential turnaround, but industry experts remain vigilant as they watch for sustained growth in the coming months.