October factory sales decline

OTTAWA – Canadian factory sales fell faster in October than economists forecast on declines in aircraft and automobiles, while inventories reached the highest in almost four years. Sales fell 1.4 per cent to $48.8 billion ($49.5 billion US), the biggest decline since January, Statistics Canada said Friday in Ottawa. Economists forecast a 0.1 per cent decrease, the median of 20 responses in a Bloomberg survey.

Canada’s factory output has stagnated since reaching about $50 billion in December and remains threatened by Europe’s debt crisis and U.S. negotiations to stave off about $600 billion of tax increases and spending cuts due in January. Manufacturers also are being held back by weak productivity gains and a high dollar, which makes Canadian goods less competitive.

“The Canadian shipments report was plain awful,” said Krishen Rangasamy, senior economist at National Bank Financial in Montreal. The data adds to signs a Dec. 21 report will show economic growth was limited to 0.1 per cent in October, he said.

The Canadian dollar was little changed at 98.47 cents per U.S. dollar at 9:44 a.m. local time in Toronto. The currency has strengthened by more than half against the greenback in the past 10 years. One Canadian dollar buys $1.0156.

Aerospace sales dropped 25.4 per cent to $1.25 billion in October, following a 37.1 per cent gain the previous month, Statistics Canada said. Automobile sales fell 3.7 per cent to $4.38 billion and primary metals declined 2.8 per cent to $3.72 billion.

Excluding price changes, a better indicator of the industry’s contribution to economic growth, factory sales fell 2.4 per cent in October.

Inventories rose 1.3 per cent to $66.2 billion, the highest since January 2009. Stocks of petroleum and coal jumped 13.2 per cent to $5.43 billion and for aerospace they advanced 5.1 per cent to $4.84 billion. The ratio of factory stockpiles to sales increased to 1.36 from 1.32, the highest since June 2011 according to the Statistics Canada figures.

Companies such as Com Dev International Ltd. are feeling the pinch. The maker of spaceexploration equipment based in Cambridge, Ont., said Oct. 2 it was firing 31 employees on reduced demand from the Canadian government.

Sales fell in 12 of 21 categories tracked by Statistics Canada, accounting for 71 per cent of production. Excluding motor vehicles and parts, sales decreased 1.2 per cent to $42.5 billion, Statistics Canada said.

Unfilled orders were little changed at $61.9 billion in October while new orders fell 0.6 per cent to $48.8 billion.