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National Bank Says StatsCan's Firm Count Data Shows Manufacturing Exposed to Trade Friction

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Statistics Canada's firm count data published Monday negates the argument that the country has remained "broadly resilient" because the effective U.S. tariff rate on its exports is relatively low, writes National Bank in a note.

While that claim may hold at the aggregate level, the same doesn't apply for sectors like manufacturing, which are most exposed to trade friction, says chief economist Stefane Marion.

National Bank's Hot Chart shows that the number of active manufacturing firms in Q1 fell to its lowest level in at least 10 years, outside the COVID-19 collapse, even though firm counts across all other industries are much closer to cycle highs.

"That divergence matters: it exposes the gap between headline resilience and industrial resilience," Marion says. "Canada may still be generating growth elsewhere in the economy, but its trade-exposed production base is telling a more fragile story. That's a troubling backdrop heading into the CUSMA review, which begins July 1 and is widely expected to extend well beyond that date."

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