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Canada June Factory Sales Fall Third Time in Four Months

Aug. 16 (Bloomberg) -- Canadian factory sales unexpectedly fell in June, with the third decline in four months underlining the struggles faced by exporters in rebuilding sales even as the U.S. economy shows signs of strengthening.

Sales fell 0.5 percent to C$48.2 billion ($46.9 billion), Statistics Canada said today in Ottawa. Economists forecast a 0.3 percent increase according to the median estimate in a Bloomberg survey with 16 responses.

Factory sales have declined 3.7 percent over the last year, hampered by a recession in the euro zone and a modest recovery in demand from the U.S., which buys three-quarters of Canada’s exports. Shipments to the U.S. aren’t gaining as much as they have in past recoveries, said Krishen Rangasamy, senior economist at National Bank Financial in Montreal.

“The export response to U.S. activity is different than what it was in the past,” Rangasamy said in a telephone interview. “The Canadian dollar has strengthened quite a bit in the past 10 years and that has contributed to us losing market share in the U.S.”

The Canadian dollar depreciated 0.4 percent to C$1.0347 per U.S. dollar at 11:32 a.m. in Toronto. One Canadian dollar buys 96.65 U.S. cents.

Output growth in the U.S. accelerated to a 1.7 percent annualized pace in the second quarter from 0.1 percent at the end of last year.

Widespread Declines

Even with faster U.S. growth, sales fell in 16 of 21 categories tracked by Statistics Canada in June, accounting for 56 percent of production. Wood products fell 7.7 percent to C$1.88 billion, while jewelry and silverware led a 20 percent decline in the miscellaneous category to C$902 million.

Sales excluding motor vehicles and parts decreased 0.6 percent to C$41.9 billion, Statistics Canada said.

Today’s report didn’t show much impact from flooding in Alberta at the end of June. Sales in that province rose 0.1 percent to C$6.13 billion, while shipments declined 1.9 percent to C$22.2 billion in Ontario, the largest manufacturing province.

Excluding price changes, a better indicator of the industry’s contribution to economic growth, factory sales fell 1.3 percent.

Unfilled orders rose 2.7 percent on the month to C$73.2 billion. Inventories fell 0.2 percent to C$68.6 billion, leaving the ratio of factory stockpiles to sales unchanged at 1.42. New orders rose 2.5 percent to C$50.1 billion.

To contact the reporter on this story: Greg Quinn in Ottawa at gquinn1@bloomberg.net

To contact the editors responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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