Manufacturing sales rose by 1.4 percent in July from June, slightly better than expectations for a 1.1 percent increase. July rebounded after a revised 1.7 percent drop in June. Real sales also rose 0.9 percent on the month. In year-over-year terms, nominal sales were down 1.1 percent and dropped by a nasty 4.1 percent in real terms.

Looking ahead, indicators improved as new orders jumped 3.7 percent on the month and unfilled orders gained 0.6 percent. Inventories increased 0.9 percent, and the inventory-to-sales ratio was flat at 1.73 in July from June and versus 1.69 a year ago.

The unadjusted capacity utilization rate dropped to 78.7 percent in July from 80.2 percent in June and versus 77.7 percent in July a year ago.

The big movers in July were petroleum and coal, up 6.7 percent on the month, and chemical products, up 5.3 percent. On the downside, wood products dropped by 4.8 percent.

By region, sales rose in seven of 10 provinces in July with Saskatchewan up big, 28 percent on the month, and Ontario, the heavyweight, showing the largest decline, down 0.6 percent.

Manufacturing sales in July are expected to rebound 1.1 percent on the month. This would compare with a 2.1 percent decline in June and 0.4 percent rise in May.

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.