| Consensus | Consensus Range | Actual | Previous | Revised | |
| Month over Month | -0.1% | -0.1% to 0.0% | 0.1% | 1.3% | 1.6% |
| Year over Year | 14.5% | 13.4% |
Highlights
Canadian manufacturing sales surprised on the upside in June as they edged up 0.1 percent from May, while the consensus in an Econoday survey of forecasters had centered on a 0.1 percent contraction. Sales were up 14.5 percent year-over-year.
Manufacturing sales increased 9.3 percent in the second quarter, with volumes, more relevent to real GDP, up 4.6 percent.
The sales volume increased 1.2 percent on the month.
Nominal sales rose across 15 of the 21 subsectors in June, led by gains of 6.0 percent in chemical and 2.8 percent in transportation equipment. Within transportation and equipment, all categories were up, including a 0.1 percent increase in motor vehicles, a 6.2 percent increase in auto parts, and a 6.0 percent gain in aerospace product and parts. Manufacturing sales excluding motor vehicles, parts and accessories decreased 0.2 percent on the month.
Looking ahead, new orders point to weakening activity as they contracted 6.8 percent. Unfilled orders, however, were up 1.2 percent.
Inventories rose 0.6 percent on the month, lifting the inventory-to-sales ratio to 1.61 from 1.60 in May.
On the downside, petroleum and coal product sales dropped 14.9 percent. Sales excluding this category increased 2.6 percent.
The manufacturing capacity utilization rate (not seasonally adjusted) edged up in June, to 82.3 percent from 82.2 percent in May.
The latest geopolitical and trade developments are adding a great deal of uncertainty for Canada's economic outlook. U.S. President trump has threatened to use Section 338 of the Smoot-Hawley Tariff Act of 1930 to impose 50-percent tariffs on US$20-billion worth of Canadian exports, including alcohol, dairy and electronics. Without agreement, the new tariffs will take effect Aug. 19. This means that trade policy will remain top of mind among risks to the outlook for the Bank of Canada.
Market Consensus Before Announcement
Forecasters see sales down 0.1 percent on the month, in line with the Stats Canada preliminary estimate.
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.