Manufacturing sales fell more than expected in January
OTTAWA Canadian manufacturing sales fell by a wider-than-expected one per cent in January, starting off the year on a weak note.
Statistics Canada reported manufacturing sales for January totalled $54.9 billion as 14 of the 21 industries moved lower, while overall manufacturing sales in volume terms declined 1.1 per cent. The decline was led by the automotive, aerospace and primary metal industries.
Economists had expected a sales drop of 0.8 per cent, according to Thomson Reuters.
Canadian factories had a rough start to the year, said CIBC economist Royce Mendes. “The survey suggests that GDP data could look soggy to open the new year,” Mendes wrote in a brief note to clients. “Factory shipments could feel some benefit as U.S. tax cuts make their way through the American economy, but already elevated inventory levels and capacity constraints could limit the gains.”
The Bank of Canada noted that fourth-quarter growth was weaker than it expected when it said it would keep its key interest rate target on hold earlier this month. The central bank also said recent trade policy developments represented a key source of uncertainty for the Canadian and global outlooks.
Royal Bank senior economist Nathan Janzen said recent Canadian economic data has been more mixed compared with a year ago when the economy was growing at an unsustainably strong clip.
“Reports on retail and wholesale trade sales next week will provide further clarification on the pace of early 2018 growth but for now we think the data is still consistent with further, albeit more modest, improvement at a close to two-per-cent rate in Q1,” Janzen said.
The drop in Canadian factory sales came as sales of motor vehicles fell 8.0 per cent to $4.9 billion, following two consecutive monthly increases.
Meanwhile, production in the aerospace product and parts industry fell 9.5 per cent to $1.6 billion, while the primary metal industry dropped 2.8 per cent to $4.1 billion.
Offsetting the drop, sales in the petroleum and coal product industry climbed 6.5 per cent to $6.1 billion, while chemical manufacturing sales rose 6.1 per cent to $4.7 billion.