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Canadian Manufacturing Sales Stall In June

ByThe National Bank of Canada
Published 08/17/2012, 03:27 AM
Updated 05/14/2017, 06:45 AM
FACTS:

Canadian manufacturing shipments fell 0.4% in nominal terms in June, after a flat May (top chart). Nonetheless, 12 of the 21 industries saw increases in sales. There was strength in shipments of durable goods (+1.6%) thanks again to the transportation category ― shipments rose 0.7% for motor vehicles, 1.1% for auto parts, and 2.2% for aerospace products. But those gains were more than offset by the 2.7% decline in shipments of non-durable goods, largely as a result of the 10.6% slump in sales of petroleum and coal products.
Manufacturing sales drop
In volume terms, factory shipments rose 0.1% after an upwardly revised 0.65% advance in May. The real inventory to shipments ratio fell in June to 1.35, a three-month low. Real new orders climbed 2.1% (entirely due to durable goods) the sharpest increase in 7 months.
Transportation have cushioned the blow for factories in Q2
OPINION: Sales of transportation equipment saved the day for factories in the second quarter, with aerospace more than reversing losses registered in the prior quarter, and autos surging 46% after taking a breather in Q1 (middle chart). The latter has been boosted by strong sales of vehicles south of the border. Excluding autos, however, the picture isn’t all that great for factories with shipments ex-autos falling for the second quarter in a row in Q2.
Factories likely contributed to GDP growth in Q2
With the upward revisions to May and the small increase in June, factory shipment volumes grew at an annualized pace of 5.8% in Q2, after a 3.8% contraction in Q1 (bottom chart). So factories likely contributed to GDP growth in the second quarter of the year. The drop in the inventory to shipments ratio and the increase in new orders, suggest some support for production in Q3.

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