MNI 5 THINGS:Cdn July Mfg Sales +0.9% But Capu Down to 78.9%>

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

By Yali N'Diaye

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

on Canadian manufacturing sales released Tuesday by Statistics Canada: 

     - Manufacturing sales rose for the third consecutive month, 

recording a 0.9% gain after increasing 1.3% in June, which was revised 

up from 1.1%, a better performance than the 0.6% increase expected by 

analysts in a MNI survey. 

     - However, the report was overall mixed, as reflected in the sector 

split that showed sales increased in 11 of 21 industries. Still, this 

represented 68% of manufacturing trade. Transportation equipment and 

chemical industries led the gains: sales excluding transportation were 

up 0.6%. Auto sales rose 3.0%, with scheduled shutdowns for some 

assembly plants shorter than in the previous years, the agency noted.  

Sales excluding autos rose 0.7%. Sales of primary metals, which include 

aluminum and steel, fell 1.1%, but volumes edged up 0.3% after falling 

2.5% in June. Tariffs imposed by the U.S. on steel and aluminum imported 

from Canada came into effect in June. 

     - While sales growth slowed down in nominal terms, real sales 

picked up, with a monthly gain of 1.0% in July, following a 0.6% 

increase in June. Gains were led by non-durables (+1.3%), while durable 

manufacturing shipments increased 0.7% in real terms. Meanwhile, 

inventories rose 1.2% on the month, with the inventory-to-sales ratio 

unchanged at 1.41. 

     - Forward-looking indicators showed a weakening picture compared to 

June. Unfilled orders flat on the month, although this is in the wake of 

healthy gains of 1.8% in June, 3.7% in May, and 1.3% in April. New 

orders fell 1.8%, the largest drop since November 2017, on the back of a 

1.6% drop in June. 

     - The report also showed that the unadjusted manufacturing capacity 

utilization rate declined to 78.9% in July from 83.5% in June, the 

lowest since February 2017. However, the decline mostly owed to a lower 

rate in transportation and equipment (74.6% after 88.3% in June). 

Statistics Canada noted that "shutdowns at several auto manufacturing 

establishments were responsible for the lower rate." Therefore it will 

be interesting to see how the capacity utilization rate evolves in 

August. 

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

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