CA: Manufacturing Sales

Wed Apr 15 07:30:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.4% -1.7% -1.7% -3.1%
Year over Year -1.5% 2.9% 1.8%

Having fallen a much steeper revised 3.0 percent on the month in January manufacturing shipments declined a further 1.7 percent in mid-quarter. February's drop was unexpected and reduced annual growth to minus 1.5 percent following a 1.8 percent rise at the start of the year.

Volumes were even weaker, falling 2.5 percent on the month to stand just 0.2 percent higher than in February 2014.

Within the monthly drop in overall nominal sales ten of the twenty-one subsectors registered reversals. Motor vehicles were down a hefty 14.9 percent and excluding this category alongside parts and accessories, headline shipments were only 0.1 percent lower. Outside of aerospace product and parts (minus 25.7 percent) other falls were much more measured. Indeed, there were sizeable gains in petroleum and coal product (5.3 percent), chemicals (8.2 percent) and miscellaneous manufacturing (6.2 percent).

Nonetheless, elsewhere the survey was equally soft. Hence, new orders were down some 17.7 percent from January while backlogs were 1.2 percent lower. Meantime, with business inventories up 0.9 percent the inventory/sales ratio climbed 0.03 months to a high 1.44 months.

With merchandise export volumes slumping fully 3.3 percent on the month, the nosedive in real manufacturing shipments leaves first quarter real GDP growth on course for something little better than zero. Indeed, this should be reflected in the updated BoC MPR's economic forecasts due later today. BoC policy is probably on hold for now but the tone of both the MPR and the central bank's interest rate announcement will be well worth noting.

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.