Free Trial

Rate Hike Path Without Recession

Real-time Actionable Insight

Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.

Free Access
By Yali N'Diaye
     OTTAWA (MNI) - Canadian manufacturing sales fell 1.8% in June, the 
largest decline since November 2014, disappointing analysts' 
expectations, which had centered on a 1.2% decrease in a MNI survey, 
data from Statistics Canada showed Thursday. 
     Sales volumes were down 1.0%, showing June's weakness was only 
partly a price story. 
     Inventories edged down 0.2%, and the inventory-to-sales ratio rose 
to 1.36 from 1.34. 
     Adding to the weak picture was the widespread nature of declines in 
June, with 15 of 21 industries posting lower sales, representing 72.1% 
of the manufacturing sector. 
     On a regional basis, weakness was also widespread as sales 
contracted in eight provinces, led by Ontario and Quebec, the 
manufacturing heart of Canada. 
     June's performance is handing off a poor start to the third 
quarter, while forward-looking indicators were not encouraging: unfilled 
orders were down 2.1%, the largest drop since February 2016, and new 
orders were down 3.0%, both posting their second consecutive month of 
     Notwithstanding the disappointment, the Bank of Canada is more 
likely to stick to its outlook than not, since it has already factored 
in an economic slowdown in the third quarter, when it sees the 
annualized real GDP growth slowing to 2.0% from 3.0% in the second 
     Besides, June's 1.8% drop comes on the back of three consecutive 
months on gains. And the 1.0% decrease in real sales, while being the 
largest since October 2016, came after gains of 1.2% in May and 0.2% in 
     Furthermore, manufacturing sales estimates were revised up over the 
previous three months, by 0.2 percentage points in May to 1.3%, by 0.4 
points in April to 0.8%, and by 0.1 point in March to 0.9%. 
     Despite June's decrease, manufacturing sales were up 1.5% in the 
second quarter from the first quarter, and rose 0.5% in constant 
dollars. Both nominal and real sales posted their fourth consecutive 
quarterly increase, with year-over-year gains of 5.5% and 3.3%, 
     Nominal sales were still up 6.2% year-over-year and real sales were 
still up 3.6% from June 2016. 
     On average, manufacturing sales rose 0.1% per month over the first 
half of 2017, compared to a 0.2% average decrease over the first half of 
2016. Real sales were flat on average each month, still an improvement 
from a 0.1% average monthly decline between January and June 2016. 
     On a sector basis, although most industries posted declines, 
machinery was up 1.8%, a positive sign for investment activity. 
     The monthly decrease was led by petroleum and coal (-7.1%), 
transportation equipment (-2.3%), and chemical products (-4.5%). 
     Excluding transportation, sales were still down 1.7%, and they were 
down 1.3% excluding petroleum. 
     Non-durable sales fell 2.2% on the month and durable sales were 
down 1.5%. 
     --MNI Ottawa Bureau; email: 

To read the full story

Why Subscribe to

MNI is the leading provider

of news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.

Our credibility

for delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.