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Canadian manufacturing sales rebound modestly in September

Canada’s manufacturing sales recorded a modest recovery in September. On a sequential basis, manufacturing sales rose 0.2 percent after falling 0.5 percent in the prior month. The release comes against expectations of a rise of 0.1 percent. After accounting for price changes, the picture was less rosy, with volumes down 0.1 percent.

Durable goods sales dropped 0.2 percent. Machinery sales dropped 6.2 percent after rising for four straight months, leading the fall. Wood products dropped 2.9 percent and primary metal sales also dropped for the fourth consecutive month. Partly countering these falls was a 6.1 percent risen in motor vehicles sales and a 10.2 percent sharp rise in the volatile railroad rolling stock category.

Non-durable goods recorded a 0.6 percent rise, mainly driven by petroleum and coal products and chemicals. Most of the gain was mainly because of price rises, rather than greater volumes. Region wise, sales rose in six provinces. The modest rise was unsurprisingly driven by Alberta, Newfoundland & Labrador, and Ontario, given the industry mix. Nova Scotia also saw a solid rise of 9.2 percent. Four provinces recorded falls, with a particularly marked pullback in Manitoba.

Inventories rose 0.3 percent, continuing with their upward trend, with the inventory-to-sales ratio staying at 1.44. Forward looking indicators came in mixed, with new orders falling 0.3 percent and unfilled orders rose modestly by 0.4 percent.

Today’s print was a bit above market expectations. However, soft volumes, and the concentration of increased sales in only 8 out of the 21 industries make this print disappointing overall, noted TD Economics in a research report.

“The third quarter as whole still contained enough positive data for Canadian manufacturing (mostly through July's release) to leave our real GDP tracking unchanged at 1.8 percent for Q3 and our expectations of a Bank of Canada rate hike in January”, said TD Economics.

At 19:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was bearish at -88.3114, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -53.8058. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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