Canada’s manufacturing sales rebound strongly in November, manufacturing sector to underpin economy in 2017

Canada’s manufacturing sales recovered strongly in November, coming in above consensus forecast. The manufacturing sales rose 1.5 percent sequentially in November, a rebound from an upwardly revised drop of 0.6 percent in October. Consensus expectations were for a rise of 1 percent. Sales also rose up in volume terms, rising 1.2 percent after adjusting for price effects.

The increase in sales was driven by non-durable goods that rose 1.8 percent sequentially. Petroleum, non-metallic mineral products and chemical also grew strongly in the month. Durables positively contributed to the overall headline, rising 1.2 percent.

Wood productions, primary metals, electronics and electrical equipment all showed strong gains, whereas transport equipment was a drag on the overall figure as a robust figure in shipbuilding was not sufficient to counter the  pull-back in both auto and aerospace shipments, noted TD Economics.

Region wise, manufacturing sales rose in all provinces except for N.B., which recorded a fall of 2.4 percent. Still, the remaining Atlantic Provinces had a good month. P.E.I., N.S., and N&L were leading the gains. Manufacturing sales in Ontario remained flat, whereas the remaining provinces recorded growth.

Inventories dropped 0.2 percent sequentially, bringing down the inventory-to-sales ratio to 1.35. Forward looking indicators stayed comparatively firm. Unfilled orders stayed flat, while new orders rose 0.5 percent.

This was a good report and the breadth of the gains throughout industries was encouraging, implying that Canada’s manufacturing sector is finding its footing after many months of uneven performance, noted TD Economics. The Canadian economy is expected to have grown by around 2 percent in the fourth quarter of 2016. Furthermore, the good print implies that the sector would give a moderate support to the Canadian economy in 2017, especially in an environment of a low Canadian dollar and healthy U.S. growth, stated TD Economics.

At 05:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was bearish at -80.4652, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 3.25329. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex