Canadian manufacturing sales fall in February, GDP growth likely to be soft in Q1 2019

Canada’s manufacturing sales dropped in the month of February. Sequentially, manufacturing sales dropped 0.2 percent after a downwardly revised 0.8 percent rise in the prior month. The release came against consensus expectations of a smaller fall of 0.1 percent. Volumes dropped 0.5 percent.

Durable good sales dropped 1.4 percent led by falls in motor vehicle assembly and wood products. Non-durable goods were up 1.2 percent. Stripping motor vehicles, total sales rose 0.2 percent. Region wise, manufacturing sales dropped in six provinces out of 10. Ontario and Saskatchewan were the biggest contributors to the fall. This was countered by gains in Quebec and New Brunswick.

Inventories rose for a third month, rising 0.5 percent, with the inventory-to-sales ratio at 1.51. New orders rose 1.5 percent, led by transportation equipment. It is one step forward, two steps back story for the Canadian manufacturing sector. The fall in February marks the third fall in four months, and while sales were solid in January, the first quarter will be hard pressed to see a rise, making it two straight quarters of retreating sales, said TD Economics.

“For the overall Canadian economy, this echoes other indicators in pointing to a soft quarter for growth. We're tracking real GDP growth just below the 1% annualized mark, making for a slow start to 2019. Relief may be some way away, as temporary auto plant closures in April will keep a lid on activity heading into the second quarter”, added TD Economics.

At 13:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at -20.5728 while the FxWirePro's Hourly Strength Index of US Dollar was bullish at 79.263 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex