| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Month over Month | -0.2% | 0.3% | 0.7% | 0.8% |
| Year over Year | -1.6% | 0.9% | 0.7% |
Highlights
With a 0.3 percent increase, Canada's manufacturing sales surprised on the upside in April, owing to stronger activity, as volumes were up 0.8 percent, while industrial prices fell 0.2 percent. The surprising resilience was reinforced by an upward revision to March's growth estimate to 0.8 percent from 0.7 percent. Forecasters in an Econoday survey had anticipated a 0.2 percent contraction on the month.
Details, however, show the picture was more mixed than the headline suggests: sales declined in 11 industries, increased in 9 and were unchanged in printing and related support activities. Non-durable goods industries were up 1.1 percent while durable goods were down 0.6 percent. Regionally, sales were concentrated in three provinces, led by Ontario.
Much of the expansion owed to a 25.1 percent surge in motor vehicle parts to a record high C$3.8 billion, on the back of a 1.7 percent increase in March. Compared to April 2022, auto part sales soared 41.0 percent, with easing supply chain issues helping boost production relative to the previous year. Manufacturing sales excluding motor vehicles and parts actually contracted 0.7 percent on the month, with vehicles down 2.6 percent. Petroleum and coal also boosted April's sales with a 4.3 percent increase due to higher volumes. On the downside, primary metals fell 5.4 percent. Machinery, an indicator of business investment activity, was down 1.0 percent.
Looking ahead, indicators were also mixed, with new orders up 2.9 percent but unfilled orders down 0.2 percent. Inventories were unchanged on the month, which, combined with higher sales, brought down the inventory-to-sales ratio to 1.71 from 1.72.
Meanwhile, the unadjusted manufacturing capacity utilization rate came down to 77.4 percent in April from 80.9 percent in March, calling for easing inflationary pressures in the manufacturing sector.
Canada's economy, despite the decline in housing starts also released this morning, continues to strongly outperform economist expectations, at plus 44 on Econoday's consensus divergence index to indicate that the risks to monetary policy are tilted toward more tightening.
Details, however, show the picture was more mixed than the headline suggests: sales declined in 11 industries, increased in 9 and were unchanged in printing and related support activities. Non-durable goods industries were up 1.1 percent while durable goods were down 0.6 percent. Regionally, sales were concentrated in three provinces, led by Ontario.
Much of the expansion owed to a 25.1 percent surge in motor vehicle parts to a record high C$3.8 billion, on the back of a 1.7 percent increase in March. Compared to April 2022, auto part sales soared 41.0 percent, with easing supply chain issues helping boost production relative to the previous year. Manufacturing sales excluding motor vehicles and parts actually contracted 0.7 percent on the month, with vehicles down 2.6 percent. Petroleum and coal also boosted April's sales with a 4.3 percent increase due to higher volumes. On the downside, primary metals fell 5.4 percent. Machinery, an indicator of business investment activity, was down 1.0 percent.
Looking ahead, indicators were also mixed, with new orders up 2.9 percent but unfilled orders down 0.2 percent. Inventories were unchanged on the month, which, combined with higher sales, brought down the inventory-to-sales ratio to 1.71 from 1.72.
Meanwhile, the unadjusted manufacturing capacity utilization rate came down to 77.4 percent in April from 80.9 percent in March, calling for easing inflationary pressures in the manufacturing sector.
Canada's economy, despite the decline in housing starts also released this morning, continues to strongly outperform economist expectations, at plus 44 on Econoday's consensus divergence index to indicate that the risks to monetary policy are tilted toward more tightening.
Market Consensus Before Announcement
Manufacturing sales, which have been swinging back and forth along a declining trend, are expected to fall back 0.2 percent in April after rising 0.7 percent in March.
Definition
Manufacturing sales for twenty-one reporting industries are the Canadian dollar level of factory shipments for manufacturing durable and nondurable goods. Volume figures are also provided. The sales statistics form part of a wide monthly report that encompasses information on new orders, backlogs and inventories and is a key input into forecasts of monthly gross domestic product (GDP).
Description
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.
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.
