- Canada manufacturing sales dipped 0.6% lower in April
- Volume sales declined 0.8%
The pull-back in manufacturing sales in April was not entirely surprising given an earlier soft international trade report for the month, and details were less concerning than the headline. A 7% drop in motor vehicle and parts sales appears to have been due to temporary plant shutdowns that will be reversed. Excluding the transportation sector and a price-led increase in the petroleum & coal component, sales were up 0.5% from April and 3% from a year ago. And a very strong month of economic data for the prior month in March, including growth in the manufacturing sector, still leaves overall GDP growth tracking at a slightly above 2% rate for Q2. That doesn’t mean there is no reason for concern about the Canadian manufacturing sector. The removal of US steel & aluminum tariffs and Canadian retaliatory measures in May will help but rising US-China trade tensions appear to be weighing on the US industrial sector – and tight cross-border integration of production chains means some of that softness will spill over to Canada. That uncertainty, more than current economic data, is what we expect will keep the Bank of Canada firmly on hold in terms of interest rate policy for the foreseeable future.
