MNI Analysis: Sept Mfg Sales +0.5%, Beat Expectations>

By Yali N'Diaye

     OTTAWA (MNI) - Manufacturing sales surprised on the upside in 

September with a further 0.5% increase, lifting the 12-month growth rate 

to 4.6% from 4.2% in August, data from Statistics Canada showed 

Thursday. 

     Real sales were up 0.7% after rising 1.0% in August, showing most 

of the performance was volume based. 

     Analysts in a MNI survey had expected sales to contract 0.5% on the 

month. 

     However, estimates for August and July were revised down by 0.2 and 

0.1 percentage points, respectively, to 1.4% and -2.7%. 

     In addition, sales were concentrated in 7 of 21 industries, 

representing just 28.9% of manufacturing trade. 

     Much of the increase owed to a 10.3% increase in petroleum and coal 

sales, which recorded their third consecutive gain, supported by a 6.7% 

rise in volumes while prices were also higher on the month. 

     A good news for the Bank of Canada's business investment scenario, 

sales of machinery rose 1.9% as volumes were 2.1% higher. 

     Partly offsetting these gains were declines in food (-1.0%) and 

transportation equipment (-0.7%), with sales of motor vehicles down 5.9% 

and sales of vehicle parts down 2.5%, both on weaker volumes. 

     Excluding motor vehicles and parts, sales rose 1.4% on the month 

after edging up 0.2% in August. 

     Overall, non-durable manufacturing sales rose 1.7% while durables 

were down 0.5%. 

     Notwithstanding September's gains, the third quarter readings 

supported the scenario of a growth slowdown in the second half of this 

year as projected by the Bank of Canada. 

     Total sales contracted 2.1% in the third quarter, the largest 

decline since the first quarter 2015. In volume, more relevant to real 

GDP, sales were down 0.6% over the quarter, the largest decrease since 

the fourth quarter 2015. 

     Besides, forward-looking indicators were not encouraging, with 

unfilled orders down 1.1% and new orders down 1.7%. 

     Inventories, meanwhile declined 0.7% on the month, bringing down 

the inventory-to-sales ratio to 1.36 from 1.38. 

     Regionally, sales increased in seven provinces, with Quebec posting 

a 1.7% increase to a record C$13.3 billion. 

     Ontario, the other large manufacturing province, recorded a 0.9% 

decrease. 

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

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