- Canadian manufacturing sales fell 0.6% (m/m) in April, following a 2.6% increase in March (previously reported as 2.1%). After accounting for price changes, the picture was still disappointing, with volumes down 0.8%.
- The decline was seen in 8 out of the 21 industries and was driven largely by durable goods industries, which fell 3.5%. Transportation equipment slumped 6.7%, with sales falling in all sub-categories. The largest contributor, however, was the drop in motor vehicle sales (-8.9%) due to temporary plant shutdowns. Primary metal shipments were also down 5.3% (after a strong 7% increase in March).
- Non-durable goods provided some offset, up 2.6% on the month. Food manufacturing shipments advanced an impressive 5.1%. Petroleum and coal product sales were also up 2.9%.
- Regionally, manufacturing sales were down in 5 of the 10 provinces. Ontario (-2.1%) and Quebec (-1.7%) drove the decline. Alberta and Saskatchewan had an impressive month, with sales up 4.6% and 6.5%, respectively.
- Inventories climbed for the fifth consecutive month (+1.3%). The combination of this and lower shipments pushed the inventory-to-sales ratio to 1.53 (up from 1.5 in March). Forward looking indicators were negative, with new orders down 1.4% and unfilled orders also down 0.3%.
Key Implications
- The disappointing release was largely pre-written given the well-telegraphed temporary plant shutdowns and April’s drop in motor vehicle exports. Indeed, excluding the transportation equipment category, manufacturing sales were up 0.8%. Details of the release were mixed, with some decent increases in non-durable good categories, positive revisions to the prior month, and solid performances in the Western provinces countered by a disappointing rise in the inventory-to-sales ratio and weak forward-looking indicators.
- The outlook for manufacturing sales remains uncertain, namely due to ongoing trade uncertainty. As noted in our latest Quarterly Economic Forecast, generally supportive domestic sentiment and strengthening domestic demand stands in contrast with a more uncertain external backdrop that may act as a headwind to manufacturing shipments and exports.
