Canada: Manufacturing shipments start 2019 on a positive note - NBF

A report released today in Canada showed that manufacturing shipments rose 1.0% in January. Kyle Dahms, analyst at the National Bank of Canada explains that sales were up in 15 of the 21 broad industries including food manufacturing (+2.8%), electronic equipment/appliances (+13.0%), wood products (+3.4%) and miscellaneous manufacturing (+5.2%), that more than offset falling shipments in the transportation equipment (-0.9%) and paper manufacturing (-2.7%) segments.

Key Quotes:

“After three consecutive declines, Canadian manufacturing sales came in above expectations in January. There were notable increases for food manufacturing and electronic equipment/appliances with the latter segment rising 13% in the month to its highest level since March 2001.”

“Sales in the transportation category acted as a drag on shipments, pulled down by the volatile aerospace product and parts industry (-12.4%).”

“The petroleum and coal products segment was flat in the month. If the relationship between energy prices and the latter segment holds true, the recent spike in Western Canadian Select prices should translate into a rebound.”

Looking at quarterly data, after having fallen an annualized 3.6% in the fourth quarter of 2018 - interrupting the longest streak of positive print since data collection began in 2002, 11 straight quarters - real total shipments are on track to increase 1.4% in the first quarter of 2019 after one month of data. That said, the recent buildup in inventories could hinder Q1 production in the manufacturing sector.”

“The unadjusted capacity utilization rate in Canada’s manufacturing sector, meanwhile, rose no less than 2.6 p.p. in January to 78.4%. “

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