Canada’s manufacturing sales rise in August, uptrend likely to continue

Canada’s manufacturing sales grew in August, the third consecutive month of increases. Sales rose 0.9 percent sequentially, as compared with consensus projection of 0.3 percent and July’s rise of 0.1 percent. The scenario was even better in real terms as volumes rose by a whopping 1.2 percent.

The increases were quite widespread and was led by metals, food and petroleum and coal products, which grew 3.6 percent, 1.7 percent and 2.5 percent respectively. Refineries were operating in full swing after the wildfires in Alberta. However, seasonal shutdowns at certain auto assembly factories led to a decline of 2.2 percent in motor vehicle manufacturing, countering the gains.

Region wise, rise in manufacturing sales were recorded in most of the regions except Quebec and Newfoundland and Labrador, which recorded drop in sales of 1.7 percent and 0.9 percent respectively. In August, Ontario registered a rise of 0.8 percent, the largest dollar gain, with increases almost across the board, noted TD Economics. Meanwhile, inventories dropped 0.5 percent in August, bringing the inventory-to-sales ratio to 1.39.

Sales in manufacturing are definitely moving in the right direction, as they come closer to the highs recorded at the beginning of 2016. The uptrend in manufacturing sales is likely to continue, with the recent rebound in the U.S. consumption expected to translate into increased demand for goods made in Canada, according to TD Economics.

The solid handoff from June, along with the increases in July and August, imply that manufacturing would be a significant contributor to Canada’s third quarter growth, added TD Economics.