MNI DATA ANALYSIS:Canada Dec Mfg Disappoint On Weak Petroleum>

By Yali N'Diaye

     OTTAWA (MNI) - Manufacturing sales contracted 0.3% in December, 

dragged down by non-durable goods industries, notably petroleum and coal 

as well as food, Statistics Canada reported Friday. 

     Analysts in a MNI survey had expected sales to increase a further 

0.5% on the month. The 0.3% decrease brought the 12-year growth rate 

down to 3.7% from 6.4%. 

     However, November's gain was revised up 0.4 percentage points to 

3.8%. 

     Overall 11 of 21 industries recorded lower sales, representing 

57.0% of the manufacturing sector. 

     Sales volumes, more relevant to real GDP, were down 0.1% on the 

month, after a 3.0% increase in November. 

     --WEAK PETROLEUM 

     The December performance was dragged by petroleum and coal sales, 

which fell 4.1% on the month, mostly as a result of lower volumes 

(-3.5%). 

     Excluding petroleum and coal, sales were up 0.2% on the month after 

advancing 3.6% in November. 

     Food was also a drag, with sales down 2.6%, partly erasing 

November's 3.6% increase. 

     On the positive side, machinery was up 3.0%, and motor vehicles up 

2.6%. 

     Sales excluding autos and parts fell 0.4% in December. 

     Overall non-durable goods industries were down 1.3% and durables up 

0.7%. 

     Regionally, sales were down in seven of ten provinces. 

     --4Q STILL POSITIVE 

     Despite December's disappointing performance, sales rebounded 2.8% 

in the fourth quarter after contracting 1.8% in the third quarter. 

     The fourth quarter gain partly owed to rising sales of petroleum 

and coal that benefited from higher prices. 

     Real sales were up 1.1% after a 0.4% decrease, indicating a 

positive contribution from manufacturing to GDP growth. 

     -- MIXED SIGNALS FORWARD 

     Looking ahead, indicators were mixed. 

     New orders rose 0.3% after a 2.3% decline in November. 

     Unfilled orders fell 0.7%, mainly due to a drop in aerospace and 

transportation equipment. 

     Inventories edged up 0.1% on the month. As a result, the 

inventory-to-sales ratio rose to 1.36 from 1.35. 

--MNI Ottawa Bureau; email: yndiaye@mni-news.com 

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