It seems only appropriate to borrow the line in the title from Samuel Clemens (a.k.a. Mark Twain) to describe the state of manufacturing in Canada.

Over the past year, many have bemoaned the state of manufacturing in Canada and suggested that it was dying due to the strong dollar. However, recent statistics do not support this thesis.

In July, according to the latest Statistics Canada report, manufacturing sales in current dollars increased by 2.7% month over month, well above the consensus forecast of 1%. The most recent rise follows three consecutive monthly increases of over 1.5%.

Probably most unsettling for the mourners of manufacturing was the fact that, adjusted for inflation, manufacturing sales rose by 2% month over month in July, the strongest monthly increase in five months. Indeed, over the past four months, the volume of manufacturing sales was up by 4%.

According to the Statistics Canada report, 17 of the 21 major manufacturing industries saw higher sales in July. Sales of primary metals (such as steel) led the way, accounting for over one-third of the total.

Sales of transportation equipment accounted for 13.3% of the monthly increase, followed by plastic and rubber products, chemicals and machinery.

From a provincial perspective, Ontario — the province that accounts for approximately half of Canada’s manufacturing output — saw sales rise by 4.7%. In other words, Ontario was, by far, the major contributor to the monthly rise in manufacturing sales, accounting for almost 80% of the increase in total sales.

Sales were up in 15 of the province’s 21 industries, led by a record 19.6% rise in primary metal products sales. Sales of Ontario transportation equipment also rose by 5% in July.

Looking forward, the recent evidence of slowing demand in the U.S. is likely to hurt manufacturing in Canada over the near term. However, with record-low levels of inventories to sales and the industry’s demonstrated resilience, manufacturing’s prospects should start to improve early in 2009.

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