CA: Manufacturing Sales

Fri Oct 16 07:30:00 CDT 2015

Consensus Actual Previous Revised
Month over Month -0.7% -0.2% 1.7%
Year over Year 0.6% -2.8% -2.7%

Manufacturing sales were down a somewhat smaller than expected 0.2 percent on the month in August. The decline followed unrevised 1.7 percent increase in July and was the first since April. Even so, compared with a year ago shipments were up 0.6 percent, a clear improvement July's minus 2.8 percent rate.

The monthly drop in nominal sales was only partly reflected in volumes which were just 0.1 percent weaker than last time and 0.9 percent above their level in August 2014.

Much of the damage to the monthly headline change was done by petroleum and coal which nosedived 5.2 percent. Fabricated metal products (minus 1.0 percent), machinery (minus 1.7 percent) and primary metals (minus 0.9 percent) also had a poor period. However, motor vehicles jumped 6.7 percent as part of a 1.0 percent gain in overall transportation, non-metallic mineral products were up 1.0 percent and chemicals 1.1 percent. Excluding motor vehicles, parts and accessories, sales were down 0.8 percent from July and 2.6 percent from a year ago.

Elsewhere in the survey the news was generally quite downbeat. Hence, new orders dropped a sizeable 5.6 percent on the month and although backlogs edged 0.2 percent higher, a 0.5 percent increase in inventories was enough to see the inventory/sales ratio move a tick higher to 1.41 months, some 0.04 months above its mark a year ago.

According to the latest labour force survey manufacturing employment was up just 600 in September and that after a 3,200 decline in August. Accordingly, the signs are that the sector is still struggling to adjust to the slump in energy prices. The worst may be over but manufacturing looks unlikely to have provided much help to third quarter GDP growth.

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.