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Goldman Sachs: Sterling In The Spotlight


(U1) Holding Onto Gains


Test 003, Please Ignore


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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;