- Manufacturing sales fell 0.7% in October
- Motor vehicle sales declined due to US GM strike
- Underlying trends still uninspiring
Controlling for price changes, manufacturing sale volumes were down 0.4% in October – and have now declined in four of the last five months. ‘Transitory’ factors were at play in the October data. Spillovers from the September-October GM strike in the US were probably responsible for a 5% drop in motor vehicle sales which, along with a pullback in parts, more-than-accounted for the total sales volume decline by our count. That drop could partially reverse in November, although with the more permanent closure of much of production at GM’s Oshawa plant still to come.
And sales were still down in 11 of 21 industries. The monthly manufacturing sales numbers are volatile at the best of times, but the sector has also struggled to hold its footing in recent months as the industrial sector globally has been weighed down by rising US-China trade tensions. Canadian manufacturing inventories are still elevated, itself a potential headwind for further production growth, and unfilled order volumes fell 1.5% in October.
The ‘phase 1’ deal between the US and China announced last week could ease downward pressure on the US industrial sector – and by extension Canada’s. For now, we expect overall economic growth to remain positive but modest with our tracking still for a 1.4% increase in Q4 GDP that would be little changed from the 1.3% increase in Q3.
