Manufacturing sales retreated by 0.5 percent in September from August, slightly better than expectations for a 0.8 percent decline. Real sales also declined 0.4 percent on the month as the industrial product price index fell 0.6 percent. In year-over-year terms, nominal sales were down a large 5.6 percent and declined by 5.1 percent in real terms.

Looking ahead, indicators are promising as new orders jumped 3.9 percent on the month and unfilled orders rose 1.6 percent.

Inventories fell 0.4 percent, and the inventory-to-sales ratio was flat at 1.74 in September from 1.74 in August and versus 1.68 a year ago.

On the unfortunate side, the unadjusted capacity utilization rate dropped to 78.6 percent in September from 79.5 percent in August and versus 78.6 percent in September a year ago.

Forecasters are sticking with the Stats Can estimate of down 0.8 percent for September, more evidence of contraction in Canada after a nasty 1.3 percent drop on the month in August.

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.