Analysis:Canada Aug Mfg Sales Top Expectatns As Autos Rebound>

--Total Sales +1.6%; Ex Autos and Parts +0.2%

By Yali N'Diaye

     OTTAWA (MNI) - Canadian manufacturing sales rebounded 1.6% in 

August, recovering part of the July unrevised drop of 2.6%, led by autos 

and petroleum and coal, Statistics Canada reported Wednesday. 

     On a 12-month basis, sales growth picked up to 4.3% in August from 

3.7% in July. 

     On a volume basis, more relevant to real GDP, manufacturing sales 

were up 1.2% on the month, showing August performance was based on 

stronger activity rather than a price story. 

     Analysts in a MNI survey had expected sales to contract a further 

0.7% in August, with longer-than-usual auto plant shutdowns expected to 

weigh on the overall performance. 

     However, the agency said even as shutdowns of auto assembly plants 

were longer than usual in July, auto production actually increased in 

August. 

     While the report was stronger than expected, gains were 

concentrated in 8 of 21 industries, representing 66% of manufacturing 

trade. 

     Along with an 8.2% increase in transportation equipment led by a 

gain in motor vehicles volumes (+13.3%), sales were also supported by 

petroleum and coal (+3.2%) owing to higher prices. 

     Excluding motor vehicles, parts and accessories, sales rose 0.2% 

after edging up 0.1% in July. 

     Excluding autos and petroleum and coal, sales were up 0.2% after 

contracting 0.7% in July. 

     Among the sectors posting gains was machinery, which was up 4.0%, 

the largest gain since November 2016, supporting the Bank of Canada's 

view that business investment is picking up. 

     Forward-looking indicators also improved in August, supported by 

transportation equipment, notably aerospace and autos. New orders rose 

4.4% on the month after falling 1.5% in July, the largest gain since 

April 2016. While unfilled orders were flat, it was better than the 

deterioration recorded in July (-1.6%) and in June (-2.3%). 

     Inventories were unchanged on the month, driving the 

inventory-to-sales ratio down to 1.38 from 1.40 in July. 

     Regionally, sales rose in eight provinces, led by Ontario and 

Alberta. 

     --MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com 

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