CA: Manufacturing Sales

Wed Sep 16 07:30:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 1.1% 1.7% 1.2% 1.5%
Year over Year -2.8% -3.1% -2.0%

Manufacturing sales exceeded expectations in July. A 1.7 percent monthly rise was the third gain in a row and followed June's upwardly revised 1.5 percent increase. However, base effects still put shipments 2.8 percent lower than a year ago, down from an annual minus 2.0 percent rate last time.

The rise in nominal shipments was not fully matched by volumes but these still posted a healthy 1.1 percent gain. Even then, this also left the July level 2.8 percent short of its mark in July 2014.

The overall monthly bounce in cash shipments was dominated by a 12.1 percent surge in motor vehicles and parts and without this category, sales climbed a more modest 0.7 percent. Still, there were tidy increases too in food (2.3 percent), fabricated metals (3.1 percent) and furniture (5.7 percent). Less promisingly, primary metals shrank 3.0 percent and computers and electronic products were off 3.3 percent.

The rest of the survey was generally upbeat. Hence, new orders surged 10.2 percent on the month and backlogs were up 2.7 percent. Inventories gained 1.1 percent but this only left the inventory/sales ratio steady at 1.40 months.

Having already recorded a surprisingly robust 0.5 percent monthly expansion rate in June, the economy appears to be shaping up moderately well in July. In particular, in addition to today's advance in real manufacturing sales, export volumes were up 1.0 percent versus June. It is still early days yet to talk about a solid, let alone broad-based, recovery in real GDP but the BoC cannot be too displeased with the way in which the third quarter has begun.

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.