CA: Manufacturing Sales

Wed Jul 15 07:30:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.3% 0.1% -2.1% -2.2%
Year over Year -3.6% -2.3% -2.1%

The downswing in manufacturing shipments at least paused in May, but only just as sales edged up a smaller than expected 0.1 percent on the month. The minimal increase followed a slightly steeper revised 2.2 percent drop in April and left shipments 3.6 percent lower on the year after a 2.1 percent annual fall last time.

However, the advance in nominal sales was not matched by volumes which dropped a further 0.5 percent versus April and now show an annual decline of 2.7 percent.

In fact, even the overall nominal monthly increase would have disappeared but for a 22.2 percent surge in aerospace product and parts. This helped to mask relatively broad-based declines amongst the other subsectors (only six saw rises) including sizeable reversals in chemicals (3.5 percent), machinery (3.5 percent) and electrical equipment, appliance and components (4.6 percent). The only other increase of note was in petroleum and coal products (5.6 percent).

Elsewhere in the survey new orders gained a welcome 1.7 percent on the month but backlogs were off 1.3 percent. Still, with business inventories falling 0.5 percent, the inventory/sales ratio dipped from 1.45 months to 1.44 months, although even this remained well above its level a year ago (1.37 months).

May's manufacturing survey paints a still very subdued picture of manufacturing activity. Compared with their peak last July shipments are down nearly 7 percent and the trend in new orders is at best only flat. Today's data will not dent a majority market call for another 25 basis point cut by the BoC later today.

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.