Canada’s manufacturing sales dropped for the third consecutive month in November. On a sequential basis, manufacturing sales fell 0.6 percent sequentially. This follows an upwardly revised 0.2 percent fall in October. Consensus expectations were for a fall of 0.5 percent. Excluding price impacts, the picture came in softer with November manufacturing volumes falling 0.8 percent.
Out of the 21 major industries, sales dropped in 11. Softness was broad based throughout both non-durable and durable goods. Primary metals dropped the most, with Statistics Canada linking the fall partially to transportation disruptions from the rail strike. Marked softness was also seen in shipments of chemicals, food and to a lesser degree, petroleum and coal products.
A strong recovery in transport equipment sales of a rise of 4.2 percent mainly countered the widespread softness. This was due to a solid aerospace product shipments of 8.5 percent and a recovery in motor vehicle parts shipments of 8.8 percent after the UAW strike.
Softness was also seen region wise, where sales fell in 8 out of 10 provinces. Sales dropped 1.6 percent in Quebec, 2.6 percent in Alberta, 8.3 percent in New Brunswick and 3.1 percent in Manitoba. Meanwhile, decent growth of 1.4 percent was recorded in Ontario, providing some offset.
Inventories rose 0.5 percent sequentially. This, along with soft sales pushed the inventory-to-sales ratio to 1.54. Forward looking indicators were decent, with new orders rising 1.9 percent and unfilled orders rising 0.1 percent.
“The manufacturing sector continues to face headwinds given a still-uncertain global macroeconomic backdrop. Although the recent Phase One trade agreement bodes well for sentiment, further progress on trade uncertainty and a confirmation that the global manufacturing downturn is bottoming out will be needed to provide a meaningful boost to the sector”, said TD Economics in a research report.
