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Canadian manufacturing sales drop sequentially in April, outlook remains uncertain

Canadian manufacturing sales eased in April. Sequentially, manufacturing sales dropped 0.6 percent, after a 2.6 percent rise in March. After accounting for price changes, the picture was still disappointing, with volumes dropped 0.8 percent.

Out of the 21 industries, 8 recorded decline and was driven greatly by durable goods industries, which dropped 3.5 percent. Transportation equipment dropped 6.7 percent, with sales dropping in all sub-categories. However, the fall in motor vehicle sales due to temporary plant was the largest contributor. Primary metal shipments also dropped 5.3 percent.

Non-durable goods gave some offset, up 2.6 percent on the month. Food manufacturing shipments rose 5.1 percent. Petroleum and coal product sales also rose 2.9 percent.

Region wise, manufacturing sales dropped in 5 of the 10 provinces. Ontario and Quebec drove the decline. Alberta and Saskatchewan had an impressive month, with sales rising 4.6 percent and 6.5 percent, respectively.

Inventories rose for the fifth straight month, rising 1.3 percent. The combination of this and lower shipments pushed the inventory-to-sales ratio to 1.53. Forward looking indicators were negative, with new orders down 1.4 percent and unfilled orders also down 0.3 percent.

The disappointing data released today was mainly pre-written given the well-telegraphed temporary plan shutdowns and April’s fall in motor vehicle exports, noted TD Economics in a research report.

“The outlook for manufacturing sales remains uncertain, namely due to ongoing trade uncertainty. As noted in our latest Quarterly Economic Forecast, generally supportive domestic sentiment and strengthening domestic demand stands in contrast with a more uncertain external backdrop that may act as a headwind to manufacturing shipments and exports”, added TD Economics.

At 14:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at -13.7148 while the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 72.4592 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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