MNI 5 THINGS:Canada Mfg Sales -0.1% But Volumes,Orders Rebound>

--5 Things We Learned From the Canadian Monthly Manufacturing Survey

By Yali N'Diaye

     OTTAWA (MNI) - The following are the key points from the October 

data on Canadian manufacturing sales released Tuesday by Statistics 

Canada: 

     - Manufacturing sales edged down 0.1% in October after progressing 

0.2% in September, a disappointing performance given that analysts in a 

MNI survey had expected shipments to increase by 0.2%. Non-durable goods 

sales rose 0.7% on stronger volumes, while durables fell 0.9%. 

Inventories rose 1.0% on the month, which did not bode well for 

production ahead. In fact, the inventory-to-sales ratio rose to 1.46, 

the highest level since August 2009. 

     - The report also showed that the unadjusted manufacturing capacity 

utilization rate fell 1.2 points to 80.7%, a disappointment for the Bank 

of Canada expecting high capacity utilization rates to eventually 

translate into stronger business investment. However, petroleum and coal 

was a big contributor due to shutdowns. The capacity utilization rate in 

the sector fell 9.0 points to 79.0%. In fact, the capacity utilization 

rate fell in just 8 of 21 industries. 

     - Underlying details of the manufacturing sales were not as weak as 

the headline suggested. October's decline was mostly a price story as 

real sales actually increased 0.2% after remaining flat in September. 

Besides, declines were concentrated in 7 of 21 industries, representing 

40.5% of manufacturing trade. In addition, among the sectors posting 

gains was machinery, where sales rose 2.9% (2.7% in volume), a positive 

sign for investment activity. 

     - Weakness was also concentrated regionally, with just three of the 

10 provinces recording lower sales: Quebec (-1.5%), New Brunswick 

(-12.0%), and British Columbia (-0.9%). 

     - In addition, forward-looking indicators rebounded in October, 

more than offsetting September's decreases. Unfilled orders rose 1.4% 

after declining 0.2% in September. New orders were up 2.4% after a 1.4% 

drop the previous month. 

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

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