Even though Canadian consumer spending is weak, the outlook for Canadian food manufacturing is bright for 2016, thanks to rising demand from the U.S. and other foreign markets, according to The Conference Board of Canada’s latest Canadian Industrial Outlook: Canada’s Food Manufacturing Industry.
The report forecasts that Canada’s food manufacturing’s industry will grow by 2.1 per cent in 2016.
“Faced with weak disposable income gains and rising household debt, Canadians will be more frugal when it comes to how they spend their food budget,” says Michael Burt, Director, Industrial Economic Trends at the Conference Board of Canada. “Luckily for food manufacturers, Canada’s new trade era of lower commodity prices, a weaker Canadian dollar, and strengthening demand from south of the border will open up new opportunities for the food manufacturing industry.”
According to Conference Board of Canada press release, highlights of the outlook include the following:
- Despite weak Canadian consumer spending, Canada’s food manufacturing industry is expected to post solid growth in 2016, thanks to record high export levels.
- Weak consumer confidence, moderate wage growth and rising household debt means Canadians will be more price-conscious in 2016.
- Labour costs are forecast to be the largest contributor to industry costs, growing by an annual average of 5 per cent over the next two years.
Seafood manufacturing is one segment of the industry that can expect to see very strong growth. As a growing number of Canadians try to curb red meat consumption, Canadians’ appetite for seafood products is increasing. The rising number of baby boomers is also expected to support growth in demand for seafood and fish products. Foreign markets’ demand for Canadian seafood products is also expected to continue to grow, as improving incomes in emerging markets support demand from high-quality sources of protein.
Export growth is expected to remain a bright spot for food manufacturers, according to the Conference Board press release. Industry export levels are at record highs, and the combination of a weaker Canadian dollar and stronger U.S. economy is expected to continue to support export growth going forward.