MNI 5 THINGS:Canadian Mfg Sales Top Expectations, Capu Rate Up>

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

By Yali N'Diaye

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

on Canadian manufacturing sales released Tuesday by Statistics Canada: 

     - Manufacturing sales rebounded 1.4% in May, topping analysts 

expectations of a 0.2% gain in a MNI survey. Overall details were solid, 

supporting the Bank of Canada's GDP rebound scenario in the second 

quarter. Sales were revised up in April, adding to the report strength, 

and are now estimated to be down 1.1% instead of the 1.3% decrease 

initially reported. March was revised up to +1.5% from +1.4%. 

     - Sales increased in 14 of 21 industries, representing 64% of 

manufacturing trade, showing gains were widespread. Real sales rose 

0.9%, showing activity strengthened. Gains were led by wood  (+6.1%), 

chemical (+6.2%), and machinery (+8.9%) products, the latter being a 

positive sign for investment activity. Petroleum and coal sales fell 

1.8% despite higher prices as volumes dropped 4.7% due to maintenance 

shutdowns at several refineries. Autos fell 6.6%. If not for auto 

weakness, sales would be up 2.6%, the largest gain since July 2011. Both 

durable and non-durable sales rose 1.4%. 

     - Forward looking indicators were also encouraging, mostly 

supported by aerospace and parts. New orders increased 4.9% after two 

months of decreases. Unfilled orders were up 3.5%, the largest gain 

since January 2015, and the fourth consecutive increase. 

     - Inventories increased 0.4% to a record C$81.5 billion. With sales 

growing at a faster rate, the inventory-to-sales ratio edged down to 

1.43 from 1.44. 

     - Statistics Canada introduced a monthly capacity utilization rate 

estimate, which is based on a survey and is unadjusted, while the 

quarterly capacity utilization estimates are derived from GDP data. In 

May, the manufacturing capacity utilization rate was 81.9%, up from 

80.6% in April. It increased to 75.9% from 70.3% in the machinery 

industry. Overall the data is supportive of higher investment ahead. 

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

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