Manufacturing sales down in January

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 survey suggests that GDP data could look soggy to open the new year.”

CIBC economist Royce Mendesx

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.