MNI ANALYSIS:Cdn Oct Mfg Sales Disappoint;Weak Transportation>

--Total Sales -0.4% M/M; Excluding Autos And Parts +0.3% M/M

By Yali N'Diaye

     OTTAWA (MNI) - Manufacturing sales disappointed in October, as they 

contracted 0.4%, while analysts in a MNI survey had expected a 1.0% 

increase, data from Statistics Canada showed Friday. 

     The disappointment was reinforced by the slight downward revision 

to September's estimate, with sales growth now estimated at 0.4% instead 

of the 0.5% initially reported. 

     In addition, it was not a price story as volumes contracted 1.5%, 

more than offsetting gains of 0.6% in September and 0.9% in August. 

     Amid declining sales, inventories rose 1.6%, the largest gain since 

last February. 

     That being said, forward-looking indicators were encouraging, with 

unfilled orders up 2.4%, the largest gain since July 2015, and new 

orders up 5.3%, the largest increase since April 2016. 

     Furthermore, weakness was concentrated in 8 of 21 industries, 

including the heavy weight transportation equipment sector, which 

recorded a 5.0% drop. 

     In particular, auto sales fell 6.7% on the month on a 7.6% drop in 

volumes, with the agency citing decreased production after shutdowns of 

some assembly plants during the month. 

     In addition, strikes likely affected the parts industry, which 

posted a 1.6% decline. 

     Excluding autos and parts, sales edged up 0.3%, marking their third 

consecutive increase. The last time this category posted a decrease was 

in June (-1.3%), with sales flat in July. 

     Other transportation equipment plunged 37.2% on the month, with 

volumes down 37.9%. 

     Excluding autos and the volatile other equipment category, sales 

increased 0.5%. 

     Another negative was a volume-led 1.4% decrease in machinery sales, 

which did not bode well for investment activity. 

     On the other hand, petroleum and coal rose 2.2%, supported by a 

1.1% gain in volumes.

     Sales excluding petroleum and coal fell 0.7% on the month, 

following a 0.5% decrease in September. 

     Overall, sales in non-durable goods industries edged up 0.1%. 

However, volumes were down 0.4%. Durable goods sales decreased 0.9%, 

with volumes down 2.4%. 

     Regionally, sales decreased in six provinces, led by Ontario 

(-2.2%), the manufacturing heart of the country, along with Quebec 

(-0.4%). 

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

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