Canadian October Factory Sales Fall Most in Nine Months
Canadian factory sales fell faster in October than economists forecast on declines in aircraft and automobiles, while inventories reached the highest in almost four years.
Sales fell 1.4 percent to C$48.8 billion ($49.5 billion), the biggest decline since January, Statistics Canada said today in Ottawa. Economists forecast a 0.1 percent decrease, the median of 20 responses in a Bloomberg survey.
Canada’s factory output has stagnated since reaching about C$50 billion in December and remains threatened by Europe’s debt crisis and U.S. negotiations to stave off about $600 billion of tax increases and spending cuts due in January. Manufacturers also are being held back by weak productivity gains and a high dollar, which makes Canadian goods less competitive.
“The Canadian shipments report was plain awful,” said Krishen Rangasamy, senior economist at National Bank Financial in Montreal. The data adds to signs a Dec. 21 report will show economic growth was limited to 0.1 percent in October, he said.
The Canadian dollar was little changed at 98.47 cents per U.S. dollar at 9:44 a.m. in Toronto. The currency has strengthened by more than half against the greenback in the past 10 years. One Canadian dollar buys $1.0156.
Aerospace sales dropped 25.4 percent to C$1.25 billion in October, following a 37.1 percent gain the previous month, Statistics Canada said. Automobile sales fell 3.7 percent to C$4.38 billion and primary metals declined 2.8 percent to C$3.72 billion.
Excluding price changes, a better indicator of the industry’s contribution to economic growth, factory sales fell 2.4 percent in October.
Inventories rose 1.3 percent to C$66.2 billion, the highest since January 2009. Stocks of petroleum and coal jumped 13.2 percent to C$5.43 billion and for aerospace they advanced 5.1 percent to C$4.84 billion. The ratio of factory stockpiles to sales increased to 1.36 from 1.32, the highest since June 2011 according to the Statistics Canada figures.
Companies such as Com Dev International Ltd. (CDV) are feeling the pinch. The maker of space-exploration equipment based in Cambridge, Ontario, said Oct. 2 it was firing 31 employees on reduced demand from the Canadian government.
Sales fell in 12 of 21 categories tracked by Statistics Canada, accounting for 71 percent of production. Excluding motor vehicles and parts, sales decreased 1.2 percent to C$42.5 billion, Statistics Canada said.
Unfilled orders were little changed at C$61.9 billion in October while new orders fell 0.6 percent to C$48.8 billion.
Today the September sales estimate was pared to show it was little changed, from a 0.4 percent advance, and the August increase was cut to 0.7 percent from 0.9 percent.
To contact the reporter on this story: Greg Quinn in Ottawa at email@example.com