Canadian manufacturing sales to show yet another leg down, with a decline of 0.6% m/m

Following on the heels of a significant drop in September's manufacturing sales (-1.5% m/m), October is expected to show yet another leg down, with a decline of 0.6% m/m. This would leave manufacturing sales firmly unwinding gains seen in 2015 Q3, and would be broadly consistent with the sharp slowdown anticipated in 2015 Q4 GDP growth. 

Weakness in Canadian exports and auto production are likely to lead the move lower in manufacturing sales, however auto production numbers have been misleading in recent months' manufacturing data, hence the upward bias. Momentum is definitely slowing in the manufacturing sector: new orders have fallen in the last two months, work in progress remained broadly flat in August, and the stock-to-sales ratio remains at elevated levels and needs to be unwound. 

A 0.5% m/m decline in industrial product prices in October suggests that in volumes terms, manufacturing shipments might come in relatively flat for the month.