Canadian manufacturing sales likely to have contracted in June

Canadian manufacturing sales data for the month of June is set to release tomorrow. According to a TD Economics research report, manufacturing activity is likely to have contracted 1.9 percent, owing to a fall in transportation equipment and lower prices for industrial goods.

Motor vehicle shipments have been unusually volatile in the past few months due to the transitory impact of plant shutdowns, but preliminary production figures and exports both point to partial giveback of last month’s 13 percent gain.

Aerospace exports also indicate towards a pullback, while fabricated metals would benefit from the removal of steel and aluminium tariffs on US bound shipments. Meanwhile, a sharp fall in gasoline prices are likely to have been a drag on nominal sales of refined petroleum products, while a 0.5 percent fall in ex-petroleum prices might have been a drag on nominal sales for the whole manufacturing sector.

“As a result, real manufacturing sales should see a more modest decline of 1 percent, leaving them up roughly 6 percent q/q (ann.) in Q2”, added TD Economics.