| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Month over Month | -0.6% | -0.7% | 1.2% | 1.5% |
| Year over Year | 0.1% | -0.8% |
Highlights
Driven down by motor vehicles and parts, manufacturing sales contracted 0.7 percent in December, marginally more than the 0.6 percent decline expected in an Econoday survey. Excluding motor vehicles and parts, sales increased 0.4 percent.
Sales volumes edged down 0.1 percent on the month, illustrating the large impact of lower producer prices on the headline sales number. Industrial prices contracted 1.5 percent.
Sales declined 1.6 percent in the fourth quarter of 2023, more than erasing the 1.3 percent advance in the third quarter. Sales increased 1.1 percent in 2023 as a whole, after expanding 18.1 percent in 2022. Real sales were up 1.5 percent in 2023 after increasing 4.9 percent in 2022.
Combined with the weaker-than-expected housing starts data released earlier Thursday, today's report brings Econoday's Relative Performance Index to minus 12, indicative of a slight underperformance of the economy. This reading, however, is consistent with a limited easing monetary policy risk and thus unlikely to rush the Bank of Canada into cutting interest rates. Instead, the central bank will likely need more reassurance before easing its policy.
In December, inventories contracted 0.6 percent, virtually as much as sales, leaving the inventory-to-sales ratio unchanged at 1.73. Looking ahead, new orders were up 2.3 percent and unfilled orders up 1.2 percent on the month.
The unadjusted capacity utilization rate was down to 75.3 percent in December from 79.1 percent in November, the lowest since January 2022, led by transportation and food.
Looking at the sales breakdown, two sectors particularly dragged the overall performance in December: motor vehicles, which fell 13.5 percent, and chemical products, down 3.1 percent. The largest gain was in aerospace product and parts, up 10.6 percent. Petroleum and coal increased 2.7 percent. Overall, durable goods decreased 1.3 percent while non-durables were flat.
Regionally, sales decreased in four provinces, led by Ontario and Manitoba.
Sales volumes edged down 0.1 percent on the month, illustrating the large impact of lower producer prices on the headline sales number. Industrial prices contracted 1.5 percent.
Sales declined 1.6 percent in the fourth quarter of 2023, more than erasing the 1.3 percent advance in the third quarter. Sales increased 1.1 percent in 2023 as a whole, after expanding 18.1 percent in 2022. Real sales were up 1.5 percent in 2023 after increasing 4.9 percent in 2022.
Combined with the weaker-than-expected housing starts data released earlier Thursday, today's report brings Econoday's Relative Performance Index to minus 12, indicative of a slight underperformance of the economy. This reading, however, is consistent with a limited easing monetary policy risk and thus unlikely to rush the Bank of Canada into cutting interest rates. Instead, the central bank will likely need more reassurance before easing its policy.
In December, inventories contracted 0.6 percent, virtually as much as sales, leaving the inventory-to-sales ratio unchanged at 1.73. Looking ahead, new orders were up 2.3 percent and unfilled orders up 1.2 percent on the month.
The unadjusted capacity utilization rate was down to 75.3 percent in December from 79.1 percent in November, the lowest since January 2022, led by transportation and food.
Looking at the sales breakdown, two sectors particularly dragged the overall performance in December: motor vehicles, which fell 13.5 percent, and chemical products, down 3.1 percent. The largest gain was in aerospace product and parts, up 10.6 percent. Petroleum and coal increased 2.7 percent. Overall, durable goods decreased 1.3 percent while non-durables were flat.
Regionally, sales decreased in four provinces, led by Ontario and Manitoba.
Market Consensus Before Announcement
After rising 1.2 percent in November and falling 2.8 percent in October, manufacturing sales in December are expected to fall back 0.6 percent.
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.
