Manufacturing sales fell 2.1% (m/m) in April, the third decline in four months, and are now 7.3% below the post-recession peak reached in July 2014. Removing the effect of price changes, manufacturing shipments slipped by 1.0% in volume terms relative to March.
As total hours worked in manufacturing and auto production gained ground in April, not to mention the uptick in volumes of new orders in March, the contraction in real manufacturing shipments in April comes as a surprise. But with aerospace often acting as the wildcard in the release, the monthly manufacturing data can be highly volatile, although three declines in four months doesn't point to a promising trend.
April's manufacturing retreat stands in contrast to most recent Canadian economic indicators, which had been pointing to an economy that is digging itself out of the doldrums of a weak Q1. Pulling together the available data so far in the quarter, real GDP growth appears likely to be in the neighborhood of 0.5% to 1% (annualized) this quarter - not great but still positive. - says TD Economics
"Although today's manufacturing release stands in contrast to the Bank of Canada's narrative of how it sees the future unfolding, we don't believe it will be sufficient to budge the Bank from its policy of holding the line on interest rates in the near term. A lack of economic and inflationary pressures are likely to keep this stance unchanged until the end of 2016." notes TD Economics
