CA: Manufacturing Sales

Fri Feb 13 07:30:00 CST 2015

Consensus Actual Previous Revised
Month over Month 0.0% 1.7% -1.4% -1.3%
Year over Year 5.2% 2.6%

Manufacturing sales followed a marginally softer revised 1.3 percent monthly fall in November with a surprisingly solid 1.7 percent gain in December. The impressive rebound put shipments some 5.2 percent above their level in December 2013, up from a 2.6 percent annual rate in mid-quarter.

Moreover, with prices falling, volume sales were even stronger and recorded a hefty 2.9 percent jump versus November.

Within the monthly rise in total nominal shipments, seventeen of the twenty-one reporting subsectors registered advances. Amongst these, transportation (6.3 percent) was especially robust but plastics and rubber products (4.3 percent), machinery (5.2 percent), non-metallic mineral products (3.4 percent) and wood (4.3 percent) also performed very well. Indeed, the headline would have been stronger still but for a 9.3 percent slump in petroleum and coal products. Excluding this category, sales were up 3.2 percent.

The rest of the survey was just as bullish. Hence, new orders gained 1.5 percent on the month and backlogs expanded 0.3 percent. With inventories off 1.4 percent, the inventory/sales ratio dropped fully 0.04 months to 1.34 months.

Having already seen merchandise export volumes climb some 3.5 percent during the month, the rebound in real manufacturing shipments in December suggests that the Canadian economy closed out 2014 on a moderately firm footing. However, with a mixed employment report and sub-50 PMI already announced for January, a patently dovish BoC is unlikely to be particularly impressed and another 25 basis point interest rate cut next month clearly remains at least a possibility.

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.