| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | 0.4% | 0.4% to 0.7% | 0.3% | -0.9% |
| Year over Year | -2.7% | -4.1% |
Highlights
Manufacturing sales recovered 0.3 percent in June, less than the 0.4 percent increase expected by forecasters in an Econoday survey. Real sales, more relevant to GDP, reflected a harsher reality, as volumes were unchanged on the month.
Overall, manufacturing sales declined 4.8 percent in the second quarter, the largest quarterly decline since the second quarter of 2020.
In June, about two-fifth of manufacturers reported being impacted by tariffs through price increases, higher expenses for raw materials, shipping or labor, and changes in demand. Statistics Canada estimates that primary metal, machinery, fabricated metal and transportation equipment are the most impacted by tariffs. Ontario, was the most affected province in June.
The 0.3 percent monthly increase was tempered by a downward revision to May's estimate, with sales now down 1.5 percent instead of the 0.9 percent drop initially reported in a fourth consecutive decline.
Sales increased in 13 of 21 subsectors over the month, led by an 11.8 percent advance in petroleum and coal after maintenance shutdowns at some refineries in May in April. Food products were up 2.5 percent on the month. By contrast, transportation equipment contracted 5.0 percent, including a 9.4 percent plunge in motor vehicles and a 2.8 percent decline in parts. The auto industry has been among the most affected by U.S. tariffs. Excluding motor vehicles, parts and accessories, manufacturing sales increased 1.1 percent on the month.
The Bank of Canada has factored in a decline in Canada second quarter GDP, including a drop in exports of manufactured goods reversing trade activity that had been pulled forward in the previous quarter and as a direct result of tariffs. GDP growth is expected to recover in the second half of the year under the central bank's current scenario where retaliatory tariffs by Canada and China are assumed to be permanent while other countries do not retaliate.
Looking ahead, new orders were up 6.0 percent in June and unfilled orders up 3.0 percent, which would point to a recovery consistent with the BoC's scenario.
Inventories increased 1.1 percent in June, lowering the inventory-to-sales ratio to 1.71 from 1.76 in May.
The manufacturing capacity utilization rate (unadjusted) increased to 79.1 percent in June from 78.6 percent the previous month, led by petroleum and coal.
Overall, manufacturing sales declined 4.8 percent in the second quarter, the largest quarterly decline since the second quarter of 2020.
In June, about two-fifth of manufacturers reported being impacted by tariffs through price increases, higher expenses for raw materials, shipping or labor, and changes in demand. Statistics Canada estimates that primary metal, machinery, fabricated metal and transportation equipment are the most impacted by tariffs. Ontario, was the most affected province in June.
The 0.3 percent monthly increase was tempered by a downward revision to May's estimate, with sales now down 1.5 percent instead of the 0.9 percent drop initially reported in a fourth consecutive decline.
Sales increased in 13 of 21 subsectors over the month, led by an 11.8 percent advance in petroleum and coal after maintenance shutdowns at some refineries in May in April. Food products were up 2.5 percent on the month. By contrast, transportation equipment contracted 5.0 percent, including a 9.4 percent plunge in motor vehicles and a 2.8 percent decline in parts. The auto industry has been among the most affected by U.S. tariffs. Excluding motor vehicles, parts and accessories, manufacturing sales increased 1.1 percent on the month.
The Bank of Canada has factored in a decline in Canada second quarter GDP, including a drop in exports of manufactured goods reversing trade activity that had been pulled forward in the previous quarter and as a direct result of tariffs. GDP growth is expected to recover in the second half of the year under the central bank's current scenario where retaliatory tariffs by Canada and China are assumed to be permanent while other countries do not retaliate.
Looking ahead, new orders were up 6.0 percent in June and unfilled orders up 3.0 percent, which would point to a recovery consistent with the BoC's scenario.
Inventories increased 1.1 percent in June, lowering the inventory-to-sales ratio to 1.71 from 1.76 in May.
The manufacturing capacity utilization rate (unadjusted) increased to 79.1 percent in June from 78.6 percent the previous month, led by petroleum and coal.
Market Consensus Before Announcement
The consensus agrees with the Statistics Canada preliminary estimate: up 0.4 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.
