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Canadian Manufacturing Sales Expand 0.4% In September

ByThe National Bank of Canada
Published 11/19/2012, 04:04 AM
Updated 05/14/2017, 06:45 AM
FACTS:

Canadian factory sales rose 0.4% in September although there were advances in only 8 of the 21 broad industries. One sector in particular, aerospace (+43%) helped to boost overall results, with some assist from petroleum/coal products (+1.2%), non-metallic mineral products (+2.9%) and primary metals (+3.7%). Those more than offset sharp declines elsewhere including autos and machinery. New orders were up 2.2% (+2% in real terms) after rising 0.2% in the prior month, although those haven't yet made up for July’s 4.5% drop.
Factory sales growth moderated in Q3
Nominal factory shipments by category
New orders contracted in Q3
OPINION: The shipments report looked good on the surface but the details were less impressive. Not only was there a sharp downward revision to the prior month but strength in September was isolated to just a few sectors. The increase in volumes seems to be a net positive for September GDP although it’s worth noting that the monthly report may not be reliable in gauging factory contribution to the economy (recall August GDP).

Looking at the quarter as a whole, real shipments grew just 1.7% in Q3, a significant moderation from Q2’s pace. Prices were generally lower, which explains why Q3 shipments were flat in nominal terms. Strength in sales of aerospace and petroleum/coal products in particular helped support factories in the quarter. The final quarter of the year isn’t looking rosy for factories based on slumping new orders.

The moderation in factory sales in the second half of the year isn’t all that surprising given the global economic slowdown underway. We continue to expect Canadian GDP growth to average well below 2% in the second half.

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