CA: Manufacturing Sales

Fri May 15 07:30:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 1.0% 2.9% -1.7% -2.2%
Year over Year 0.3% -1.5% -2.4%

Following back-to-back falls in January and February manufacturing sales ended the first quarter on a relatively upbeat note. A 2.9 percent monthly increase, only the second rise since September, was significantly larger than expected and more than reversed February's steeper revised 2.2 percent contraction. As a result, annual growth of shipments climbed from minus 2.4 percent to 0.3 percent.

In addition, the improvement in nominal sales was matched by volumes which also rose a solid 2.9 percent versus February.

Within the monthly increase in total nominal sales there were gains in ten of the twenty-one reporting subsectors. Aerospace was up fully 42.3 percent after a 29.4 percent slump last time and autos were 12.8 percent better off. There were also respectable gains in food (3.0 percent) and miscellaneous manufacturing (1.8 percent). The largest negative contribution came from fabricated metal products which dropped 3.6 percent although both wood products (minus 1.0 percent) and paper (minus 0.8 percent) similarly struggled.

Elsewhere in the survey the news was generally positive. Hence, while a 5.1 percent monthly spike in new orders contrasted with a 0.2 percent fall in backlogs, a 0.4 percent decline in inventories reduced the inventory/sales ratio from 1.45 months to 1.41 months.

With merchandise export volumes already reported up a healthy 1.9 percent on the month, the bounce in March's real manufacturing shipments suggests that the economy closed out the first quarter on a reasonably upbeat note. Certainly the latest MPR call for a zero quarterly GDP growth rate now looks overly pessimistic. That said, today's surprisingly good results are unlikely to have any impact on BoC policy.

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.