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Canada: Bounce back in manufacturing sales in November – RBC Economics

Nathan Janzen, Senior Economist at RBC Economics, notes that the Canadian manufacturing sales bounced back in November as the nominal sales rose 1.5%, largely reflecting higher volume sales, following a 0.6% October drop.

Key Quotes

“In volume terms, sales rose 1.2% in November following a 1.6% drop in October.  Year-over-year, volume sales were also up 1.2% in November, matching the October increase.”

“Much of the increase in nominal sales (about half) was accounted for by a large 9.1% jump in the primary metal component that more than retraced an 8% decline over the prior two months.  As expected, the value off petroleum and coal sales bounced back 3.7% reflecting the end of maintenance shutdowns that reportedly weighed on  sale volumes in October.  The main source of offset was a pullback in the transportation sector (-2.3%) that in turn reflected in large part a 7.4% drop in the often-volatile aerospace component although motor vehicle sales also declined by 0.6%.”

Our Take:

  • The rebound in November is consistent with our view that, looking through monthly volatility, the underlying trend in the sector remains modestly positive reflecting a continued easing in the drag from the oil & gas sector and a modest pickup in U.S. demand.   In terms of overall GDP implications, the details of report suggest that November manufacturing output likely retraced about half of an outsized 2% decline in October which, alongside a pickup in November exports, suggests that overall GDP may have retraced much of the 0.3% October decline.
  • We continue to expect economic output rose 1.5% (at an annualized rate) in Q4 which also remains consistent with the Bank of Canada’s updated call in yesterday’s updated Monetary Policy Report.” 

Author

Sandeep Kanihama

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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