Canada – Manufacturing sales dropped 1% in May, after an unrevised 1.0% rise the prior month. In May, sales were down in 15 of the 21 broad industries (representing 70% of total Canadian manufacturing) including a 2.2% decline for the transportation sector. In real terms, factory sales declined 2.1% in May while inventories were down 1.2%. New orders were down 4.6% in real terms. The factory data was softer than expected. The pullback in volumes suggest factories hurt economic growth in May and the drop in inventories is adding to the bad news. Moreover, the previous month’s surge in new orders was almost all erased in May indicating that a substantial rebound in the coming months is now less likely. Due to the pullback in May, factory volumes are at their lowest level in seven months. After two months in the quarter, real factory shipments are down roughly 2% in Q2 after a sizable expansion of nearly 5% the prior quarter. Our view remains that Canada’s economy, after registering above potential growth in Q1, contracted in the second quarter furthermore dragged down by Alberta’s wildfires.
The Teranet–National Bank National Composite House Price IndexTM rose 2.3% in June, with monthly gains in 10 of the 11 markets surveyed. Vancouver led the pack with a monthly rise exceeding 2% for a fifth month in a row. The 12-month rise of the composite index was 10.0%, the largest since July 2010. It was led by 12-month gains well above the national average in Vancouver (23.4% − the largest on record), Hamilton (+13.8%), Victoria (+12.5%) and Toronto (+12.4%). Those four markets contrast sharply with the other seven. Prices were barely higher than a year earlier in Winnipeg (1.7%), Ottawa-Gatineau (1.4%), and Montreal (0.5%) and down from a year earlier in Calgary (−2.4%), Edmonton (−1.9%), Quebec City (−1.4%) and Halifax (−0.7%).
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