| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | -1.5% | -1.5% to -1.5% | -1.0% | 2.5% |
| Year over Year | -1.2% | -1.7% |
Highlights
Manufacturing sales contracted 1.0 percent in August, less than the 1.5 percent decrease expected by forecasters in an Econoday survey. The monthly growth rate in July was revised down to 2.2 percent from 2.5 percent.
July's decline was due to lower activity as volumes fell 1.5 percent on the month.
Looking ahead, new orders were down 0.5 percent on the back of a 2.2 percent drop the previous month. By contrast, unfilled orders increased 0.3 percent.
Inventories were also up 0.3 percent, with the inventory-to-sales ratio edging up to 1.75 in August from 1.73 in July.
The underlying picture was mixed in August, with 12 of 21 subsectors recording lower sales, led by a 5.7 percent decline in transportation equipment, including a 3.3 percent drop in motor vehicles and a 5.2 percent decrease in parts sales. A combination of lower-than-usual seasonal sales of parts and slower production at an Ontario auto assembly plant weighed on the auto industry, not to mention tariff-related uncertainty leading to irregular production schedules. The statistical agency also highlighted lower exports of motor vehicles and parts in August. Excluding motor vehicles, parts and accessories, manufacturing sales were down 0.7 percent. The latest news from the auto sector wasn't promising as Stellantis announced Tuesday it is abandoning plans to build its Jeep Compass model in Ontario as part of a $13 billion investment commitment to expand manufacturing capacity in the U.S.
Lower aerospace product and part production - down 8.6 percent in August following a 6.9 percent gain in July - was also a primary downward contributor to weaker transportation equipment sales.
Food also dragged manufacturing performance with sales down 1.9 percent.
On the upside, primary metals increased 3.6 percent on the month, when exports of unwrought aluminum and aluminum alloys soared 45.1 percent.
Regionally, sales were down in six provinces, led by Quebec and Ontario, Canada's manufacturing heart.
Despite lower sales in August, the manufacturing capacity utilization rate (unadjusted) increased to 78.6 percent from 77.2 percent in July.
July's decline was due to lower activity as volumes fell 1.5 percent on the month.
Looking ahead, new orders were down 0.5 percent on the back of a 2.2 percent drop the previous month. By contrast, unfilled orders increased 0.3 percent.
Inventories were also up 0.3 percent, with the inventory-to-sales ratio edging up to 1.75 in August from 1.73 in July.
The underlying picture was mixed in August, with 12 of 21 subsectors recording lower sales, led by a 5.7 percent decline in transportation equipment, including a 3.3 percent drop in motor vehicles and a 5.2 percent decrease in parts sales. A combination of lower-than-usual seasonal sales of parts and slower production at an Ontario auto assembly plant weighed on the auto industry, not to mention tariff-related uncertainty leading to irregular production schedules. The statistical agency also highlighted lower exports of motor vehicles and parts in August. Excluding motor vehicles, parts and accessories, manufacturing sales were down 0.7 percent. The latest news from the auto sector wasn't promising as Stellantis announced Tuesday it is abandoning plans to build its Jeep Compass model in Ontario as part of a $13 billion investment commitment to expand manufacturing capacity in the U.S.
Lower aerospace product and part production - down 8.6 percent in August following a 6.9 percent gain in July - was also a primary downward contributor to weaker transportation equipment sales.
Food also dragged manufacturing performance with sales down 1.9 percent.
On the upside, primary metals increased 3.6 percent on the month, when exports of unwrought aluminum and aluminum alloys soared 45.1 percent.
Regionally, sales were down in six provinces, led by Quebec and Ontario, Canada's manufacturing heart.
Despite lower sales in August, the manufacturing capacity utilization rate (unadjusted) increased to 78.6 percent from 77.2 percent in July.
Market Consensus Before Announcement
As usual, forecasters agree with the Statistics Canada preliminary estimate of minus 1.5 percent on month in August from July.
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.
