Canadian manufacturing sales increased 0.9% in August following a 0.1% gain the previous month and the gain was higher than the expected advance of 0.3% for the month. The second successive decline in orders will offset any positive impact from the headline data.
There was a 1.0% decline in sales on an annual basis, while, in volume terms, there was a 1.3% gain on the year.
New orders declined 0.9% on the month to give a 3.2% annual decline, while unfilled orders fell by 1.3% to give an annual fall of 7.5%. There was some negative impact from a stronger Canadian dollar on the month given that aircraft orders are priced in US dollars, but overall orders declined for the second successive month.
Inventories fell 0.5% to give an annual decline of 3.2% and the inventory/sales ratio declined to 1.39 from 1.41 the previous month.
Sales increased in 15 of the 21 industries on the month representing 69% of the total sector.
Sales in the food manufacturing sector increased 1.7% to a record high with a 5.4% annual increase. There was also a strong increase in primary metals output of 3.6% on the year to give a 7.8% annual gain.
There was an increase of 2.5% in the petroleum and coal sector, although still with a 12.9% annual decline. In contrast, there was a disappointing reading for the transport sector with a 1.1% decline and 3.5% annual retreat.
The sales data will offer some underlying encouragement, but the decline in orders offers a more sobering assessment and will cause some underlying doubts whether stronger sales will be sustained.
The Canadian dollar strengthened after the data with USD/CAD dipping to 1.3060 from 1.3080, although the move was pared quickly given the dip in orders.
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