Canadian Manufacturing Sales Dip 0.2% in August

  • Canadian manufacturing sales dipped 0.2% in August 2013, slightly below market expectations for a 0.2% increase, following a 1.7% jump in July and an upwardly revised 0.2% increase (was a 0.1% drop) in June.
  • Controlling for prices, the volume of sales declined 0.3% following an unrevised 1.1% jump in July and a 0.6% drop in June (-0.9% previously). Inventories rose 0.3% in August, thereby matching the pace of growth in July.
  • The decline in sales overall was led by a 2.1% drop in Ontario, although sales also declined notably in Saskatchewan (-6.0%), New Brunswick (-2.3%), and Newfoundland (-2.3%). Partial offset was provided by stronger sales in Quebec (3.2%) and Alberta (1.9%).
  • Manufacturing sales remain subdued with the dip in the volume of August sales leaving the measure 2.1% below its year-ago level. Moreover, the details of today’s report suggest that the manufacturing component of monthly gross domestic product (GDP) likely declined by 0.7% in the month following a sizeable 1.1% jump in July. We expect offset from a further recovery in mining and construction activity in August as rebuilding and repair continued after severe flooding in Alberta in June. As well, reports on retail and wholesale trade out next week will provide further indications about the strength of service-sector output in August. Data released to date, however, are consistent with overall GDP growth of 0.2% in the month, which would be slightly below our prior assumption for a 0.3% gain.

Canadian manufacturing sales dipped 0.2% in August 2013 following a 1.7% surge in July and an upwardly revised 0.2% increase (previously reported as a 0.1% drop) in June. Most of the weakness was concentrated in sales of non-durable products, which together declined 0.7% in August. Weakness among non-durable components was broadly based, with only a 1.0% rise in petroleum and coal sales providing a notable partial offset. Sales of durable goods rose 0.4% despite a 2.5% drop in motor vehicle sales and a 22.6% plunge in “miscellaneous” goods. Sales of primary (3.0%) and fabricated (1.1%) metal products as well as a 17.8% surge in the volatile aerospace component provided the main sources of strength.

Controlling for the effect of prices, the volume of sales declined 0.3% in August. This only partially retraced a 1.1% gain in July that followed a sizeable, but upwardly revised, 0.6% decline in June (previously reported as -0.9%). Inventories rose 0.3%, thereby matching the pace of growth in July.

The decline in sales overall was led by a 2.1% drop in Ontario, although sales also declined notably in Saskatchewan (-6.0%), New Brunswick (-2.3%), and Newfoundland (-2.3%). Partial offset was provided by stronger sales in Quebec (3.2%) and Alberta (1.9%).

Manufacturing sales remain subdued with the dip in the volume of August sales leaving the measure 2.1% below its year-ago level. Moreover, the details of today’s report suggest that the manufacturing component of monthly GDP likely declined by 0.7% in the month following a sizeable 1.1% jump in July. We expect offset from a further recovery in mining and construction activity in August as rebuilding and repair continued after the severe flooding in Alberta in June. As well, reports on retail and wholesale trade out next week will provide further indications about the strength of service-sector output in August. Data released to date, however, are consistent with overall GDP growth of 0.2% in the month, which would be slightly below our prior assumption for a 0.3% gain.

 

RBC

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