CA: Manufacturing Sales

Tue Jan 20 07:30:00 CST 2015

Consensus Actual Previous Revised
Month over Month -0.5% -1.4% -0.6% -1.1%
Year over Year 2.6% 5.7% 4.8%

Manufacturing sales fell a sharper than expected 1.4 percent on the month in November. The decline, which followed a steeper revised 1.1 percent drop in October, reduced annual growth of shipments from 4.8 percent to 2.6 percent, its weakest reading since November 2013.

The latest reversal in cash sales was exactly matched by volumes for which a 1.4 percent monthly decrease reduced yearly growth to just 0.9 percent.

Within the monthly slide in overall nominal sales sixteen of the twenty-one subsectors posted declines. Amongst these, motor vehicles were down 5.9 percent, electrical equipment, appliance and components 6.0 percent, chemicals 3.6 percent and primary metals 5.4 percent. Food (minus 1.3 percent) also struggled. The only increases of note were in aerospace products and parts (9.1 percent) and motor vehicle parts (2.0 percent).

Otherwise the survey was mixed. Hence, while new orders fell 1.7 percent versus October, backlogs edged up 0.2 percent. Still, with inventories up 0.1 percent, the inventory/sales ratio rose 0.02 months to 1.38 months to match its level of a year ago.

With merchandise export volumes sliding some 1.6 percent on the month the drop in November real manufacturing shipments suggests that the Canadian economy was probably quite sluggish in mid-quarter. Certainly there is nothing here to make the BoC sound any less dovish at tomorrow's interest rate announcement and updated Monetary Policy Report.

Manufacturing sales are the Canadian dollar level of factory shipments for manufacturing durable and nondurable goods.

Manufacturer's shipments represent the monetary level of factory shipments for durable and nondurable goods and are a relevant indicator for an export-oriented economy. The data are used by analysts to evaluate the economic health of manufacturing industries. They are also used as inputs to GDP and needless to say, these data are used by the central bank in its decision-making process.

The monthly survey of manufacturing of which shipments is a part, provides a broad look at manufacturing activity levels. The level of activity in manufacturing can be affected by the level of interest rates which slows or stimulates the demand for goods and production. Shipments are an indication of how busy factories have been as manufacturers work to fill orders. The data not only provide insight to demand for items such as refrigerators and cars, but also business investment such as industrial machinery, electrical machinery and computers. Because a large proportion of shipments are headed south of the border to the U.S. and include a wide variety of durables, shipments are affected by U.S. economic activity as well as the exchange rate. Although the focus in this report is on shipments, it also contains information on inventories and new and unfilled orders.

Results from this survey are used by both the private and public sectors including finance departments of the federal and provincial governments, the Bank of Canada, Industry Canada, the System of National Accounts, the manufacturing community, consultants and research organizations in Canada, the United States and abroad.