ICBA EconoBot: Manufacturing Holds the Line, but Input Prices Spike to Four-Year High

TOP STORY

Manufacturing Holds the Line, but Input Prices Spike to Four-Year High

Canada's manufacturing sector kept expanding in May. The S&P Global Canada Manufacturing PMI eased to 52.9 from 53.3 in April, holding well above the 50 line, with output, new orders, and employment (51.1, a 19-month high) all advancing. But the inflation story turned ugly: both input and output prices accelerated to their highest readings in nearly four years, with firms blaming U.S. tariffs and supply-chain disruptions linked to the war in Iran. For B.C. and Alberta contractors, that pass-through into structural steel, metal fabrications, diesel, and transportation costs is already showing up on quote sheets — and the Bank of Canada now has to decide on June 10 whether it can keep ignoring it.

THE NUMBERS — STATISTICS CANADA

Provincial and Territorial Cultural Indicators, 2024 — Released today. National culture and sport GDP rose 4.4% to $75.4 billion in 2024, just shy of total economy growth (+4.9%). The B.C. angle is striking: at 4.3%, the province has the highest share of culture jobs in the country, B.C. sport GDP grew 9.1% (the strongest of any province), and culture contributes 2.8% to provincial GDP — also the national lead. Alberta's gains were more in line with the national average. Useful context as governments keep leaning on “creative economy” arguments to justify subsidies that other sectors can only dream of. Statistics Canada

FROM THE ECONOMISTS

RBC Economics — Forward Guidance: Expect Canada's Unemployment Rate to Tick Lower in May — Looking to Friday's Labour Force Survey, RBC pencils in roughly 25,000 new jobs and an unemployment rate easing to 6.8%, with some 15,000 census-related federal hires doing most of the heavy lifting. The private-sector picture is still “low hire, low fire,” with layoffs concentrated in trade-exposed sectors and long-term unemployment elevated.

WORTH WATCHING

Bank of Canada Decision — June 10 — The Bank held at 2.25% in April and markets are leaning toward another pause. CIBC and Scotiabank still pencil in 75 bps of hikes before year-end; today's PMI input-price spike, the oil tape, and tariff pass-through give the hawks more ammunition than they've had in months.

May Labour Force Survey — June 6 — The real test is whether private-sector hiring is rebounding or whether the headline gain is just census-driven federal payroll noise. B.C. and Alberta breakdowns will matter: B.C.'s labour market has been weakening through 2026, while Alberta has held up better on energy strength.

Alberta West Coast Pipeline Submission — July 1 — Premier Smith is finalizing a one-million-bpd West Coast pipeline proposal for the federal Major Projects Office, with three northern B.C. routes on the table. Premier Eby is opposed, but federal designation under Bill C-5 could fast-track the project despite provincial objections — setting up the constitutional fight of the decade.

IN BRIEF

Softwood Lumber — The U.S. Department of Commerce has signalled it will lower combined antidumping and countervailing duties on Canadian softwood to 24.83% from 35.16% following its annual review. Layered on the 10% Section 232 tariff, total effective duties stay near 35.9% once they take effect in August — cold comfort for B.C. sawmills bleeding capacity since 2025.

LNG Canada Phase 2 — The joint-venture partners approved hundreds of millions in incremental funding last month to finalize critical work scopes ahead of a potential final investment decision by year-end. LNG Canada has also taken the lead on the Coastal GasLink expansion — two of the biggest construction prizes on B.C.'s books.

The ICBA EconoBot is an AI-powered briefing trained in the analytical perspective and policy interests of ICBA Economics. Prepared with data from Statistics Canada, bank economics desks, and policy research institutes.