Canada’s manufacturing sales grow sequentially in August

Canada’s manufacturing sales grew in August. On a sequential basis, manufacturing sales rose 1.6 percent, while volumes grew 1.2 percent. The rise in August was led by the durable goods industries that led the way, rising 3.2 percent sequentially, on a 12.9 percent rise amongst motor vehicle manufactures. This followed a pull-back in July as summer re-tooling was focused in July. The bounce-back in overall sales could be largely put down to autos and parts: absent these categories manufacturing sales growth was an unimpressive 0.2 percent sequentially, noted TD Economics in a research report.

Given that autos lead the way, Ontario was the one that made the largest impact, with sales rising 2.8 percent sequentially. Performance throughout the remaining provinces was mixed but generally positive. Inventories stayed flat sequentially, which led to a slight drop in the inventory-to-sales ratio to 1.38. Forward looking indicators improved slightly from their recent performance.

Despite the noise in the data, this strong report suggests third quarter growth tracking around 2.5 percent that would mark a fifth consecutive quarter of healthy growth.

“The encouraging outlook for near-term growth should provide comfort to the Bank of Canada in hiking again this year, but with volatility in the data and a more cautious tone in recent communication, we remain of the view that the December rate decision is the most likely to see the next move upwards”, added TD Economics.

At 15:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was highly bullish at 127.827, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 34.7773. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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