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Canada’s manufacturing sales fall again in November, manufacturing performance to be sub-par in near term

Canada’s manufacturing sales dropped in November after falling in the prior month. Sales dropped 1.4 percent, as compared with the consensus expectations of a fall of 0.9 percent and prior month’s fall of 0.1 percent. After accounting for price changes, the print was still disappointing, with volumes falling 0.9 percent.

Durable goods sales rose 0.5 percent, owing to transportation equipment sales that rose 1.3 percent on the back of a sharp rise in the volatile railroad rolling stock and aerospace products and parts categories. Fabricated metal products also saw a decent rise of 1.5 percent. Meanwhile, non-durable goods dropped 3.4 percent, mainly drove the fall in the headline figure. This was mainly because of a fall in petroleum and coal product sales.

As anticipated, lower global oil prices mainly drove part of this fall, but refinery maintenance and lower production also led to lower volumes print. Only partly countering this fall in non-durable good shipments was a rise in food product sales.

Region wise, manufacturing sales fell in six provinces. Ontario, Alberta, Newfoundland & Labrador, and New Brunswick led the overall fall. Quebec, Saskatchewan and Manitoba saw decent rises, up 0.9 percent, 3.3 percent and 5.2 percent, respectively. Inventories fell 0.6 percent, the first monthly fall in over one year. The inventory-to-sales ratio rose to 1.47. Forward looking indicators were mainly negative, with new orders falling 2.9 percent and unfilled orders rising modestly by 0.3 percent.

Today’s release affirms the moderating growth narrative, one that has been strengthened by other disappointing releases, including the recent international trade data and today’s wholesale trade data, noted TD Economics in a research report. Sub-par manufacturing performance is likely in the near-term, as Alberta’s production curtailment plan begins to show in manufacturing sales volumes.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was slightly bearish at -65.0625, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 22.8027 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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