MNI DATA ANALYSIS: Canada Mfg, Wholesale Sales Disappoint>

By Yali N'Diaye

     OTTAWA (MNI) - Canadian manufacturing and wholesale sales 

disappointed in November, and the oil sector did not explain all the 

weakness, data released Tuesday by Statistics Canada showed. 

     Manufacturing sales contracted by 1.4% to C$57.3 billion in 

November, bringing down the 12-month growth rate to 2.7% from 7.8% in 

October. Analysts in a MNI survey had expected sales to fall 1.0%. 

     Wholesale sales were also down in November, when they posted a 1.0% 

decline from October, the largest monthly drop since March 2016. 

Analysts had expected a 0.5% decline. 

     - WEAKNESS IN ENERGY 

     While petroleum and coal explained an important part of the 

decrease in manufacturing sales, a total of 13 out of 21 industries 

recorded lower shipments, and volumes were down 0.9%. 

     Petroleum and coal fell 13.8% after rising 1.9% in October, with 

prices down 6.8%. In addition to lower prices, the agency cited 

maintenance and turnaround work at some refineries, as well as lower 

production at other refineries. 

     As a result, non-durable manufacturing sales fell 3.4% on the 

month, more than erasing October's 0.9% gain. 

     Sales in oil-rich Alberta led the decline, as well as Ontario. 

Petroleum and coal declined in both provinces. 

     Weakness in petroleum and coal translated into a lower capacity 

utilization rate in the manufacturing sector. It fell 1.7 percentage 

points to 78.8% (unadjusted), the lowest since February 2017. 

     Within the petroleum and coal industry, the capacity utilization 

rate dropped 8.8 points to 70.3%, recording its fourth consecutive 

decrease. 

     - MACHINERY DOWN 

     Sales in durable manufacturing, on the other hand, managed to rise 

0.5%. 

     Overall manufacturing sales excluding petroleum and coal rose 0.2% 

on the month, with transportation equipment and food manufacturing being 

two important upward contributors. 

     However, machinery fell 1.5%, as volumes contracted 1.3%. 

     At the wholesale level, machinery, equipment, and supplies sales 

were also down, with a 2.3% decrease on the month, the largest since 

November 2017. 

     Such a performance does not bode well for business investment 

activity in Canada, although tax incentives only came into effect toward 

the end of November. So it remains to be seen how effective the measures 

will be. 

     Wholesale sales were down in 5 of 7 subsectors, with building 

material and supplies being another important downward contributor. 

Motor vehicles and parts brought some offset, with a 0.4% gain on the 

month. 

     Sales fell in five provinces, with Ontario and British Columbia 

contributing the most. 

     - INVENTORY-TO-SALES RATIOS INCREASE 

     With wholesale sales down 1.0% and inventories rising just 0.7%, 

the inventory-to-sales ratio climbed to 1.41, the highest level since 

March 2009. 

     In the manufacturing sector, where inventories fell 0.6%, the ratio 

rose to 1.47, the highest since August 2009. 

     Forward-looking indicators were mixed in the manufacturing sector, 

with unfilled orders up 0.3%, while new orders fell 2.9%. 

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

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