Manufacturing sales rebounded more than twice as fast as expected in July, when they rose 1.6 percent from June, topping the 0.7 percent consensus. Volumes were up 0.9 percent, indicating prices also played a noticeable part in July's increase. Sales were flat year-over-year.

With sales expanding 1.6 percent and inventories falling 0.7 percent, the inventory-to-sales ratio dropped to 1.70 from 1.74. Looking ahead, sales prospects don't look too bright, with new orders down 0.1 percent and unfilled orders down 1.0 percent.

The unadjusted capacity utilization rate for the manufacturing sector dropped to 77.6 percent from 80.8 percent, pointing to easing price pressures. The utilization rate came down to 76.5 from 82.4 percent for durable goods industries and to 78.7 from 79.0 percent for non-durables.

Sales in July increased in 11 industries and decreased in 10, indicating a picture that is more mixed than the headline suggests. A port strike in British Columbia impacted manufacturing activity as it disrupted supply chains on the west coast. The strike hit 13.2 percent of manufacturing plants nationally, mostly through raw material shortages and transportation issues. Statistics Canada estimates that paper products and chemicals were most impacted. Sales in paper manufacturing fell 4.6 percent though chemicals managed to rise 0.4 percent.

Leading the gains were food products (3.1 percent), petroleum and coal products (4.6 percent mainly on higher prices) and transportation equipment (2.4 percent). The latter included a 3.5 percent increase in motor vehicles to their highest level since May 2017. Manufacturing sales excluding motor vehicles, parts and accessories rose 1.3 percent on the month. Overall, sales were up 1.6 percent in durable goods industries and 1.5 percent in non-durable manufacturing.

With today's report, Econoday Relative Performance Index rose to 29, pointing to an economy performing appreciably stronger than expected.

After falling 1.7 percent in June and reflecting widespread declines, manufacturing sales in July are expected to rebound 0.7 percent.

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).

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.