HomeContributorsFundamental AnalysisCanadian Manufacturing Sales Pulled Back in June

Canadian Manufacturing Sales Pulled Back in June

Highlights:

  • Manufacturing sales fell 1.8% in June.
  • The drop was broadly-based with declines in 15 of 21 industries although prices accounted for more than half of a large 7.1% drop in petroleum & coal sales.
  • Sale volumes fell 1.0%. That did not fully retrace the 1.2% jump in May. The measure was still up solidly from a year ago.
  • Machinery sale volumes averaged 20% above year-ago levels in Q2
  • Overall Q2 GDP growth still looks broadly on track to match Q1’s 3.7% increase.

Our Take:

Manufacturing sales took a breather in June but the 1% drop in sale volumes still did not fully retrace the 1.2% increase in May. The often-volatile measure is still up almost 4% from a year ago. That’s down from almost 5% in May but is still the second-highest year-over-year reading since December of 2014. Sales of machinery have led the way, averaging 20% above year-ago levels in volume terms in the second quarter. Part of that probably reflects stronger activity in the U.S. industrial sector year-to-date but domestic Canadian business investment has also been showing encouraging signs of life. Concerns about the recently commenced NAFTA renegotiation – and any potential for resulting trade protectionism – does present some potential downside risks going forward. At this point, though, we expect today’s dip lower in sales likely is more of a downward blip on an improving trend than a fundamental slowing.

RBC Financial Group
RBC Financial Grouphttp://www.rbc.com/
The statements and statistics contained herein have been prepared by the Economics Department of RBC Financial Group based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This report is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities.

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