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By Greg Quinn and Anahita Alinejad
OTTAWA (MNI) - Canadian manufacturing sales posted a surprise
decline in July as automakers retooled lines to produce new models, and
a measure of inventories reached the highest since the country's last
recession in 2009.
Sales fell 1.3% versus the MNI economist consensus for no change on
the month. Ottawa-based Statistics Canada also marked down June sales to
a 1.4% decline from the initial estimated 1.2% decrease.
Motor vehicle sales dropped 4.7% in July as a major assembly plant
retooled to switch to a new model. Still, even excluding autos
manufacturing sales fell 1% on the month, reflecting weakness across
two-thirds of industry groups.
The report underlines concerns about a potential global slowdown
linked to a U.S.-China trade war, tensions in the Middle East and
Brexit. Weaker-than-expected factory sales come as Canada's economy is
already expected to slow significantly in the second half of the year.
Inventories are also piling up again, a sign companies are
struggling to sell their goods. Canada's ratio of inventories to sales
climbed to 1.54 in July from 1.52 in June, reaching the highest since
the last recession in 2009. The rise came as sales declined while
inventories swung to a 0.3% increase in July from June's 1.3% decline.
The other major contributor to the July decline was the metals
industry, down 7.3% following an 11% rise in June. Iron and steel mill
production dropped 15%, even after the end of U.S. metals tariffs
earlier this year.
The manufacturing capacity utilization rate also fell 4
percentage points to 77.3% in July. That is the lowest reading since
Statistics Canada started compiling that data at the start of 2017.
From a year earlier, manufacturing sales fell 1.9% in July. Sales
have declined from a record high set earlier this year.
--MNI Ottawa Bureau; +1 613-314-9647; email@example.com