| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | 1.8% | 1.7% to 1.8% | 2.5% | 0.3% |
| Year over Year | -1.7% | -2.7% |
Highlights
Manufacturing sales started the third quarter with an upside surprise, as they increased 2.5 percent in July, while the consensus in an Econoday survey of forecasters had centered on a 1.8 percent monthly gain.
While part of the increase was price related, volumes were still up 1.6 percent from June.
Today's report is unlikely to weigh down much on the odds of a Bank of Canada rate cut given the ongoing weakness reflected in year-over-year data: sales contracted a further 1.7 percent year-over-year after declining 2.5 percent in June. Volumes were also lower, with a 3.4 percent decline from July 2024.
Looking ahead, the sales growth acceleration in July might be short lived, as new orders fell 2.2 percent and unfilled orders edged down 0.1 percent.
What's more, the unadjusted manufacturing capacity utilization rate came down to 78.3 percent in July from 78.9 percent in June.
Elsewhere, inventories were up 0.8 percent on the month, for an inventory-to-sales ratio of 1.72, down from 1.75 in June.
Overall, sales rose in 13 of 21 industries and decreased in eight industries, with durable goods sales up 4.1 percent and nondurables up 0.9 percent.
Increases of 8.6 percent in transportation equipment, 6.2 percent in petroleum and coal products and 3.5 percent in primary metals led the expansion in July.
In transportation, sales of motor vehicles increased 11.4 percent and parts rose 7.2 percent. Assembly plants usually shut down in July in Ontario, but the impact of these seasonal patterns was less evident due to the U.S. tariffs dragging activity. Manufacturing sales excluding autos, parts and accessories increased 1.8 percent on the month. After maintenance shutdown at refineries in April and May, petroleum production resumed in both June and July. Of note, machinery, an indication of business investment, increased 3.6 percent.
On the downside, chemicals dropped 2.5 percent, recording the largest decline.
Regionally, gains were widespread across seven provinces, led by Ontario and Quebec, Canada's manufacturing heart.
While part of the increase was price related, volumes were still up 1.6 percent from June.
Today's report is unlikely to weigh down much on the odds of a Bank of Canada rate cut given the ongoing weakness reflected in year-over-year data: sales contracted a further 1.7 percent year-over-year after declining 2.5 percent in June. Volumes were also lower, with a 3.4 percent decline from July 2024.
Looking ahead, the sales growth acceleration in July might be short lived, as new orders fell 2.2 percent and unfilled orders edged down 0.1 percent.
What's more, the unadjusted manufacturing capacity utilization rate came down to 78.3 percent in July from 78.9 percent in June.
Elsewhere, inventories were up 0.8 percent on the month, for an inventory-to-sales ratio of 1.72, down from 1.75 in June.
Overall, sales rose in 13 of 21 industries and decreased in eight industries, with durable goods sales up 4.1 percent and nondurables up 0.9 percent.
Increases of 8.6 percent in transportation equipment, 6.2 percent in petroleum and coal products and 3.5 percent in primary metals led the expansion in July.
In transportation, sales of motor vehicles increased 11.4 percent and parts rose 7.2 percent. Assembly plants usually shut down in July in Ontario, but the impact of these seasonal patterns was less evident due to the U.S. tariffs dragging activity. Manufacturing sales excluding autos, parts and accessories increased 1.8 percent on the month. After maintenance shutdown at refineries in April and May, petroleum production resumed in both June and July. Of note, machinery, an indication of business investment, increased 3.6 percent.
On the downside, chemicals dropped 2.5 percent, recording the largest decline.
Regionally, gains were widespread across seven provinces, led by Ontario and Quebec, Canada's manufacturing heart.
Market Consensus Before Announcement
Forecasters agree with the Statistics Canada preliminary estimate that sales jumped 1.8 percent in July after rising 0.3 percent in June.
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.
