Canadian manufacturing sales likely to have rebounded in August

Canadian manufacturing sales data for the month of August is scheduled to release tomorrow. According to a TD Economics research report, manufacturing sales are likely to have recovered by rising 1 percent in August. This would be after the 1.3 percent contraction recorded in the prior month, which reflected a sharp fall in primary metals alongside auto production shutdowns.

The latter extended into early August, which might restrict the recovery in motor vehicle shipments, although a more substantial rebound in metals is expected. Primary metals had negatively contributed 0.6 percentage points from last month’s report, and their rebound along with a wide pickup in U.S. activity are the main drivers behind the upbeat forecast. Nevertheless, there will be a slight drag from lower petroleum prices while stronger homebuilding activity south of the border might have limited impact on demand for forestry products.

“This is due to a structural decline in Canadian sawmills over the last year, with shipments of wood products down 24 percent y/y through July. Real manufacturing sales should post a smaller increase owing to higher factory prices”, added TD Economics.