Canada April Factory Sales Post Surprise DeclineGreg Quinn
Canadian factory sales unexpectedly fell for the first time in four months in April on reduced production of petroleum and aircraft.
Sales fell 0.1 percent to C$50.9 billion ($46.8 billion), Statistics Canada said today in Ottawa. Economists forecast a 0.5 percent increase according to the median of a Bloomberg survey with 15 responses.
Manufacturing is among the final segments of the economy still underperforming after the 2009 recession, lagging behind gains in consumer spending. Excluding price changes, a better indicator of the industry’s contribution to economic growth, factory sales rose 0.4 percent in April, today’s data show, suggesting “a temporary weather-related slowdown, not the beginning of more fundamental weakness,” according to economist Bill Adams at PNC Financial Services Group.
“Inventories and unfilled orders stayed high in April, leaving room for manufacturing sales, and eventually production, to pick up and recover lost ground as the year continues,” Adams, a senior international economist in Pittsburgh, wrote in a client note.
The “ingredients” for a slow return to full strength include rising global demand and a lower Canadian dollar that will support exports after a harsh winter disrupted production, Bank of Canada policy makers said June 4.
Petroleum and coal product sales dropped 5.0 percent to C$6.87 billion in April, a month where seasonal refinery shutdowns were “more extensive than usual,” Statistics Canada said. Aerospace sales fell 6.2 percent to C$1.52 billion, paring the increase over the prior 12 months to 10.6 percent.
Inventories rose 1.1 percent to C$72.4 billion, with the fourth straight gain boosting the ratio of factory stockpiles to sales to 1.42 from 1.41 in March.
Other parts of the report suggested manufacturing strength. Sales rose in 14 of 21 categories tracked by Statistics Canada, accounting for 60 percent of production, including a 2.6 percent gain in automobile-parts receipts to C$2.22 billion, the highest since October 2007. Gains in automobile production helped sales in Ontario, Canada’s most populous province, rise 0.6 percent to C$23.5 billion, the highest since July 2008.
Paper sales jumped 12.1 percent to C$2.16 billion in April, with the biggest percentage gain in Statistics Canada back to 1992 fostered by the end of a strike at the port of Vancouver.
New factory orders rose 2.5 percent to C$51.3 billion and unfilled orders rose 0.5 percent to C$89.7 billion.
From a year earlier, manufacturing sales rose 5.7 percent.
Canada’s dollar was little changed after the report at C$1.0859 per U.S. dollar at 9:30 a.m. Toronto time. Government bond yields rose, including the security due in five years, to 1.61 percent from 1.59 percent.
In a separate report, Statistics Canada said the nation’s surplus of international assets widened in the three months through March for a fifth straight quarter. The so-called net international investment position grew to C$30.2 billion from the fourth quarter’s surplus of C$27.6 billion, which was the first ever in records back to 1990. The increase was aided by a weaker Canadian dollar, which boosted the value of foreign assets held in the country.