Manufacturing sales slide in June: Statcan
TORONTO Domestic manufacturing sales declined in June, reflecting trade tensions and a slight rebound from large one-time deals in May, according to Statistics Canada.
Manufacturing sales fell 1.2 per cent to $58 billion in June after a 1.6-per-cent increase in May, Statcan said. Sales were down in 16 of 21 industries, representing more than two thirds of total manufacturing sales, according to the agency. Still, the month-to-month decline in Canadian manufacturing sales was better than expected by a consensus of economists forecasting a 1.8-per-cent drop.
The petroleum and coal product and food industries accounted for most of the month’s decline, it said.
“With recent surges in manufacturing shipments largely driven by one-off transactions, specifically in the transportation equipment category, June’s pullback was to be expected,” Omar Abdelrahman, an economist at TD Economics in Toronto, said in a note to clients. “The outlook for manufacturing remains highly susceptible to the ongoing moderation in global growth and elevated trade tensions.”
Reprisals by China, the world’s second-largest economy, after Canada detained Huawei chief financial officer Meng Wanzhou last year has snagged Canada in the middle of a trade war with the U.S. as President Donald Trump considers billions more in tariffs against the Asian nation.
For the second quarter, manufacturing sales rose 1.7 per cent to $174.5 billion, the data show. That’s a “still-healthy” amount, according to Abdelrahman, “but suggests soft momentum heading into the third quarter,” he said. After five consecutive monthly increases, sales in the petroleum and coal product industry fell 3.8 per cent to $6.3 billion in June as refineries in eastern and western Canada saw lower prices depress revenue, Statscan said.
Sales of primary metals jumped 11.7 per cent in June, but were partially offset by a 5.6 per cent decline in machinery and 2.7 per cent fewer wood product shipments, the agency said. Durable goods rose 0.7 per cent in the month, it said.
Meantime, signs of a looming recession such as an inverted yield curve on bond rates is rattling business confidence. Despite the spectre of a looming crisis manufacturing stocks fell in June, which Scotiabank says is “a welcome sign, as the elevated inventory levels prompted concerns about the durability of growth going forward.