Canadian manufacturing sales rise above expectations in May

Canada’s manufacturing sales rose sequentially in May, coming in above consensus expectations. Canadian manufacturing sales were up 1.4 percent after last month’s upwardly revised 1.1 percent fall. After accounting for price changes, volumes rose a decent 0.9 percent.

Gains were evenly divided throughout both non-durable and durable goods, with both moving up 1.4 percent. Non-durable sales were driven by chemicals manufacturing sector, rising 6.2 percent. In the meantime, machinery sales rose 8.9 percent, contributing the most to durables sales rises.

Transportation equipment sales continued to fall, declining 1.9 percent, driven by a 6.6 percent fall in motor vehicle sales. Petroleum and coal shipments also dropped again, falling 1.8 percent as recovery in production in Alberta was countered by shutdowns in Eastern Canada.

Region wise, the prairies led the way, with Alberta recording a rise of 7.9 percent, and Manitoba and Saskatchewan gaining 7.5 percent and 5.5 percent, respectively. Manufacturing sales also rebounded in four other provinces. Ontario and Nova Scotia recorded modest falls at -0.2 percent and -0.4 percent, respectively, whereas Newfoundland and Labrador recorded particularly disappointing performance at -29.7 percent.

Inventories continued with their upward trend, rising 0.4 percent, with the inventory to sales ratio reaching 1.43. Forward looking indicators came in positive, with new orders rising 4.9 percent and unfilled orders also rose 3.5 percent.

The rebound seen in today’s report was widespread and exceed expectations, stimulated further by an upward revision to the earlier month.

“Overall, today's data implies a modest upward revision to our second quarter real GDP tracking, lifting it a tenth to 2.6 percent. Combined with other positive data on housing, this is a notch in the further-interest-hike column from a data-dependent Bank of Canada”, noted TD Economics in a research report.

At 16:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was highly bearish at -102.436, while the FxWirePro's Hourly Strength Index of US Dollar was bullish at 94.7285. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex